Question 1

In order to compute equivalent units of production using the Weighted Average method of process costing, the following equation should be used:
A)Equivalent units of beginning work in process + units completed and transferred out
B)Equivalent units of beginning work in process + equivalent units of ending work in process
C)Units completed and transferred out + equivalent units of ending work in process
D)Units completed and transferred out + equivalent units of beginning work in process

Accepted Answer

The Weighted Average method calculates equivalent units of production by adding the units completed and transferred out to the equivalent units of ending work in process, accounting for both completed and partially completed units at the end of the period.

Question 2

If beginning work in process is 2,000 units, ending work in process is 1,000 units, and the units accounted for equals 5,000 units, what are the units completed and transferred out?
A)7000
B)6000
C)4000
D)2000

Accepted Answer

Units completed and transferred out can be calculated by subtracting the ending work in process from the total units accounted for. Therefore, 5,000 units (accounted for) - 1,000 units (ending work in process) = 4,000 units completed and transferred out.

Question 3

Conversion costs are the sum of:
A)Direct materials costs and direct labor costs
B)Indirect materials costs and indirect labor costs
C)Direct materials costs and overhead costs
D)Direct labor costs and overhead costs

Accepted Answer

Conversion costs consist of direct labor costs and overhead costs, as they represent the costs to convert raw materials into finished goods.

Question 4

A production cost report
A)Used to record the costs chargeable to a specific job
B)Shows only cost data for a production department
C)Provides a basis for evaluating the productivity of a department
D)Combines process cost and job order costing systems costs

Accepted Answer

A production cost report provides a basis for evaluating the productivity of a department by summarizing the costs associated with a particular production process or department, rather than recording costs for specific jobs or combining costing systems.

Question 5

Which is not a similarity between job order costing and process costing?
A)Methods of assigned costs
B)Tracking of direct materials, direct labor and manufacturing overhead
C)Accumulating journal entries
D)Flow of costs

Accepted Answer

The answer of Which is not a similarity between job...

Question 6

The journal entry that assigns raw materials costs in a process costing system includes
A)Debit to raw materials
B)Credit to raw materials
C)Debit to Accounts Payable
D)Credit to Work in Process

Accepted Answer

In a process costing system, when raw materials are assigned to production, the raw materials account is credited to decrease its balance, reflecting the use of materials.

Question 7

Calculating equivalent units in a weighted average method:
A)The beginning inventory percentage complete is used only for conversion costs
B)The beginning inventory percentage complete is used for both material and conversion costs
C)The beginning inventory amount is not accounted for
D)The beginning inventory amount is used in total

Accepted Answer

The answer of Calculating equivalent units in a weighted average...

Question 8

in a process costing system, manufacturing overhead is assigned to work in process by
A)Department based on actual overhead costs incurred
B)Department based on predetermined overhead rates
C)Job based on actual overhead costs incurred
D)Job based on predetermined overhead rates

Accepted Answer

In a process costing system, manufacturing overhead is typically assigned to work in process by department based on predetermined overhead rates. This method allows for more consistent and predictable allocation of overhead costs throughout the production process, as actual overhead costs can fluctuate. Predetermined rates are calculated based on estimated costs and activity levels, making it easier to assign overhead costs to products as they move through different departments.

Question 9

Which of the following system applies when standard goods are produced under a series of inter connected operations?
A)Job order costing
B)Process costing
C)Standard costing
D)All of the above

Accepted Answer

Process costing is used when standard goods are produced under a series of interconnected operations.

Question 10

The process costing system is best suited for
A)Industries where different types of products are manufactured
B)Industries where homogenous products are manufactured on continuous basis
C)Service industry only
D)All of the above

Accepted Answer

The process costing system is most appropriate for industries where homogeneous products are manufactured on a continuous basis, as it allows for the accumulation of costs for a continuous production process, distributing them evenly over the units produced.

Question 11

Which of the following business is likely to adopt a process costing system?
A)Plan manufactures
B)Construction companies
C)Sugar refining
D)Printing press

Accepted Answer

Process costing is used in industries where production is continuous and units are indistinguishable from each other, such as sugar refining.

Question 12

Materials labor and overhead costs are traced to processing departments rather than individual products or jobs. This statement is true for
A)A job order costing system
B)An activity based costing system
C)A process costing system
D)A variable costing system

Accepted Answer

In a process costing system, costs are traced to processing departments rather than individual products or jobs. This method is typically used in industries where the products are more homogeneous, such as manufacturing of chemicals, food, or petroleum products.

Question 13

In process costing system, the materials can be added in
A)First department only
B)Last department only
C)First and last department only
D)Any department

Accepted Answer

Materials can be added at any stage of the production process, depending on the nature of the product and the production process itself. This means materials might be added in the first, last, or any intermediate department.

Question 14

Which of the following is not relevant to a process costing system?
A)Heterogeneous products
B)Recitative production
C)High production volume
D)Low production flexibility

Accepted Answer

Process costing is used for homogeneous products, not heterogeneous products. It's suitable for continuous, high-volume production with low flexibility, making A the correct choice as it does not relate to process costing.

Question 15

Which of the following is not correct about process costing and job order costing?
A)Both the system classify materials as direct material and or indirect materials.
B)Both the system classify labor ans direct labor and or indirect labor
C)Direct materials under job order costing might be indirect under process costing and vice versa.
D)Both the systems assigns costs by process.

Accepted Answer

Process costing assigns costs by process or department for homogeneous products, while job order costing assigns costs to individual jobs or batches, making choice D incorrect as it suggests both systems assign costs in the same manner.

Question 16

In process costing system, when partially completed units are expressed in terms of fully completed units they are known as
A)Completed units
B)Equivalent units
C)Unfinished units
D)Transferred units

Accepted Answer

Equivalent units in a process costing system refer to the number of fully completed units that could have been produced given the amount of work actually performed on partially completed units. This concept allows for the calculation of costs per unit in processes where goods are produced in a continuous flow or in batches.

Question 17

The direct material costing Rs. 4000 has been used in mixing department. The correct journal entry would be
A)Direct materials Dr. and work in process-mixing department CR
B)Work-in -process-mixing department Dr and Direct materials Cr
C)Finished goods DR and Direct materials Cr
D)Mixing department Dr and Direct material Cr

Accepted Answer

The correct journal entry for using direct materials in a production department involves debiting the Work-in-Process account for that specific department (in this case, the mixing department) to reflect the increase in costs due to the addition of materials, and crediting the Direct Materials account to reflect the decrease in inventory as those materials are used. This accurately tracks the flow of material costs into production.

Question 18

In a process costing system, the manufacturing overhead (or factory OH) is usually applied using
A)Predetermined overhead rate
B)An actual overhead rate
C)A conversion overhead rate
D)An indirect labor rate

Accepted Answer

Predetermined overhead rates are commonly used in process costing systems to apply manufacturing overhead costs to products. This method involves estimating the overhead costs and the base for allocation (such as machine hours or labor hours) before the period begins, allowing for more consistent and timely application of overhead costs throughout the accounting period.

Question 19

In process costing system, the predetermined overhead rate is computed.
A)Only once and used for all the processing department
B)Separately for each processing department
C)Only for the first processing department where units are started
D)Only for the last department where units are completed and transferred to finished goods area.

Accepted Answer

The predetermined overhead rate is often computed separately for each processing department because each department may have different overhead costs and bases for allocation. This allows for more accurate assignment of overhead costs to products as they move through different stages of production.

Question 20

Where the normal loss in a department is identified at the end of process, its cost is :-
A)Ignored
B)Charged to work in progress ending inventory only
C)Charged to units completed and transferred out only
D)Charged to work in process ending inventory as well as to units completed and transferred out

Accepted Answer

The answer of Where the normal loss in a department...

Quiz 2: Process Costing: Methods and Applications

In order to compute equivalent units of production using the Weighted Average method of process costing, the following equation should be used:

If beginning work in process is 2,000 units, ending work in process is 1,000 units, and the units accounted for equals 5,000 units, what are the units completed and transferred out?

Conversion costs are the sum of:

A production cost report

Which is not a similarity between job order costing and process costing?

The journal entry that assigns raw materials costs in a process costing system includes

Calculating equivalent units in a weighted average method:

in a process costing system, manufacturing overhead is assigned to work in process by

Which of the following system applies when standard goods are produced under a series of inter connected operations?

The process costing system is best suited for

Which of the following business is likely to adopt a process costing system?

Materials labor and overhead costs are traced to processing departments rather than individual products or jobs. This statement is true for

In process costing system, the materials can be added in

Which of the following is not relevant to a process costing system?

Which of the following is not correct about process costing and job order costing?

In process costing system, when partially completed units are expressed in terms of fully completed units they are known as

The direct material costing Rs. 4000 has been used in mixing department. The correct journal entry would be

In a process costing system, the manufacturing overhead (or factory OH) is usually applied using

In process costing system, the predetermined overhead rate is computed.

Where the normal loss in a department is identified at the end of process, its cost is :-