Question 1

Equivalent units of production are always the same as the total number of physical units finished during the period.

Accepted Answer

Equivalent units of production take into account both the completed units and the partially completed units (i.e. units that are in process and not yet finished) during a period. Therefore, the equivalent units of production may be higher or lower than the total number of physical units finished during the period.

Question 2

If a department that uses process costing starts the reporting period with 100,000 physical units that were 20% complete with respect to direct labor, the equivalent units of direct labor in beginning Work in Process are 20,000.

Accepted Answer

The equivalent units of direct labor take into account the percentage of completion for the beginning Work in Process, which is given as 20% in this scenario. Therefore, the equivalent units of direct labor in beginning Work in Process are calculated as 100,000 units x 20% = 20,000 units.

Question 3

Process and job order manufacturing operations both combine materials, labor, and overhead items in the process of producing products.

Accepted Answer

Both process and job order manufacturing involve the use of materials, labor, and overhead costs to produce products. However, the way in which they are combined and the level of customization involved may differ.

Question 4

Equivalent units of production is the number of units that could have been started and completed given the costs incurred during the period.

Accepted Answer

Equivalent units of production take into account the partially completed units in process at the end of the period, and calculates the number of equivalent fully completed units that could have been produced with the costs incurred.

Question 5

A process cost summary is an accounting report that describes the costs charged to each department, the equivalent units of production by each department, and determining the costs assigned to each department's output.

Accepted Answer

A process cost summary provides details about departmental costs, equivalent units of production, and cost allocation to each department's output.

Question 6

In a process costing system, companies typically end each period with only Finished Goods Inventory.

Accepted Answer

In a process costing system, companies typically have three types of inventory at the end of each period: Finished Goods Inventory, Work-in-Process Inventory, and Raw Materials Inventory.

Question 7

The FIFO method of computing equivalent units focuses on production activity in the current period only.

Accepted Answer

The FIFO (first-in, first-out) method of computing equivalent units only considers the production activity in the current period and does not take into account any work in process from the previous periods. It assumes that the first units produced are completed and transferred out before any later units.

Question 8

The FIFO method of computing equivalent units excludes the beginning inventory costs in computing the cost per equivalent unit for the current period.

Accepted Answer

The FIFO method assumes that the beginning inventory costs were completed in the previous period, so they are not included in the cost per equivalent unit for the current period. Only the costs incurred during the current period are used to compute the cost per equivalent unit.

Question 9

Conversion cost per equivalent unit is the combined costs of direct labor and factory overhead.

Accepted Answer

Conversion cost per equivalent unit is the sum of direct labor cost and factory overhead cost per equivalent unit.

Question 10

The process cost summary is an important managerial accounting report prepared for each process or production department.

Accepted Answer

The process cost summary is indeed an important managerial accounting report prepared for each process or production department. It summarizes the costs incurred and units produced during the period, and helps managers make decisions regarding the efficiency and profitability of the production process.

Question 11

Manufacturers that utilize process operations produce large quantities of identical products.

Accepted Answer

Process operations are designed to produce large quantities of identical products.

Question 12

A process cost summary usually does not include the number of equivalent units of production for the period.

Accepted Answer

A process cost summary does typically include the number of equivalent units of production for the period. This is important information for determining the cost per unit of production.

Question 13

Equivalent units of production is an engineering term used to describe the process by which one company attempts to manufacture units of a product that are equivalent to the product manufactured by a competitor.

Accepted Answer

Equivalent units of production is an accounting term used to convert partially completed units into the equivalent number of fully completed units. It is not related to manufacturing products that are equivalent to those of a competitor.

Question 14

In a process costing system costs are only measured upon completion of each job.

Accepted Answer

In a process costing system, costs are measured continuously throughout the production process rather than upon completion of each job. This is because process costing involves the production of identical or similar units over an extended period of time, and the costs must be allocated to each unit based on the amount of resources consumed at each stage of production.

Question 15

The FIFO method of computing equivalent units includes the beginning inventory costs in computing the cost per equivalent unit for the current period.

Accepted Answer

The answer of The FIFO method of computing equivalent units...

Question 16

The cost object in a process costing system is the specific job.

Accepted Answer

The cost object in a process costing system is not a specific job, but rather a process or a production batch. The total cost of the process or batch is then allocated to the units produced within that process or batch.

Question 17

Equivalent units of production for direct materials and direct labor are always the same.

Accepted Answer

Equivalent units of production for direct materials and direct labor are not always the same, as they have different conversion processes and factors that affect their production. Direct materials may have a different unit of measure than direct labor, and their production may require different amounts of time and resources. Therefore, the equivalent units of production for direct materials and direct labor may differ for a given production process or project.

Question 18

A process cost summary shows the cost of a particular job manufactured in the reporting period.

Accepted Answer

A process cost summary shows the costs associated with all the jobs manufactured in a reporting period, not just a particular job.

Question 19

The managers of process operations focus on the series of repetitive processes, or steps, resulting in a noncustomized product or service.

Accepted Answer

This is a correct statement about the focus of process operations managers. They are concerned with optimizing and improving the efficiency of the series of steps involved in producing a noncustomized product or service. This differs from the focus of managers of job operations, who are concerned with coordinating and managing the unique requirements of individual, customized jobs or projects.

Question 20

Conversion cost per equivalent unit is the combined costs of direct materials and factory overhead.

Accepted Answer

The answer of Conversion cost per equivalent unit is the...

Quiz 3: Process Costing and Analysis