Question 1

The number of beginning units in process plus the number of ending units in process should equal the number of units started plus the number of units completed.The number of beginning units in process plus the number of units started should equal the number of units completed plus the number of ending units in process.

Accepted Answer

False

Question 2

If 1,800 units were started and there were 200 units in beginning inventory and 400 units in ending inventory,then the number of units completed is 1,600.The number of beginning units in process (200)plus the number of units started (1,800)should equal the number of units completed (1,600)plus the number of ending units in process (400).

Accepted Answer

The equation is correct: Beginning Inventory (200) + Units Started (1,800) = Units Completed (1,600) + Ending Inventory (400).

Question 3

Under the weighted-average method,the only partially completed units that need to be addressed are the units in beginning inventory.Under the weighted-average method,the only partially completed units that need to be addressed are the units in ending inventory.

Accepted Answer

The statement is incorrect. Under the weighted-average method, both partially completed units in beginning and ending inventory need to be addressed in order to calculate the cost of goods sold and the value of ending inventory.

Question 4

A separate Work in Process Inventory account is used in process costing for each major production process.In process costing,there will be a separate Work in Process Inventory account for each of the major processes.

Accepted Answer

In process costing, Work in Process Inventory accounts are used to track the costs associated with each major production process. This allows for more accurate cost allocation and tracking of inventory at various stages of production. Therefore, there will be a separate Work in Process Inventory account for each of the major processes.

Question 5

A major difference between job order costing and process costing is the treatment of nonmanufacturing costs.In both job order costing and process costing,nonmanufacturing costs are expensed in the period in which they are incurred.

Accepted Answer

In job order costing, nonmanufacturing costs are expensed in the period in which they are incurred. In process costing, nonmanufacturing costs are inventoried as indirect costs and are expensed when the related units are sold.

Question 6

Process costing is used to calculate the cost of homogenous goods or services.Process costing is used by companies that produce homogeneous products or services using a series of standardized processes.

Accepted Answer

Process costing is indeed used by companies that produce homogeneous products or services using standardized processes.

Question 7

The three major categories of product costs in process costing are direct materials,conversion costs,and manufacturing overhead.The three major categories of product costs in process costing are direct materials,direct labor,and manufacturing overhead,or direct labor and manufacturing overhead can be combined into conversion costs.

Accepted Answer

The answer of The three major categories of product costs...

Question 8

A process costing production report prepared using the weighted-average method is acceptable for external reporting purposes whereas a process costing production report prepared using the FIFO method is not acceptable for external reporting purposes.Either method of preparing a process costing production report is acceptable for external reporting (GAAP).

Accepted Answer

Both the weighted-average and FIFO methods are acceptable for external reporting purposes under GAAP.

Question 9

The process costing production report can be prepared using either the weighted-average method or the last-in,first-out (LIFO)method.The process costing production report can be prepared using either the weighted-average method or the first-in,first-out (FIFO)method.

Accepted Answer

The process costing production report can be prepared using either the weighted-average method or the first-in, first-out (FIFO) method, not the last-in, first-out (LIFO) method.

Question 10

The key difference between a process costing production report prepared using one of the two acceptable methods is how they deal with any units and costs that are in ending Work in Process Inventory.The key difference between a process costing production report prepared using one of the two acceptable methods is how they deal with any units and costs that are in beginning Work in Process Inventory.

Accepted Answer

The answer of The key difference between a process costing...

Question 11

A company that offers customized products would use job order costing.Job order costing is used by companies that offer customized products or services.

Accepted Answer

Job order costing is the most suitable costing system for companies that produce unique and customized products or services, which require specific inputs, processes, and resources for each job. The costs are accumulated for each job separately, by assigning direct and indirect costs to a specific order, batch, or project. Therefore, the company can calculate the total cost of each job, and determine the selling price based on the actual cost and desired profit margin. This method is widely used in industries such as construction, engineering, printing, and consulting services.

Question 12

Computing equivalent units is particularly important for products that take a long time to manufacture,such as airplanes.Computing equivalent units is particularly important for products that take a long time to manufacture,such as wine that must be aged or airplanes.

Accepted Answer

Computing equivalent units is important for products that take a long time to manufacture because it helps to accurately track the costs of production and inventory levels during the manufacturing process. This is especially important for products like airplanes or wine that require lengthy production or aging processes.

Question 13

A process costing production report prepared using the weighted-average method is more accurate but generally more costly to prepare than one prepared using the FIFO method.A process costing production report prepared using the weighted-average method is simpler and less costly to prepare.But,a process costing production report prepared using the FIFO method is generally more accurate.

Accepted Answer

The statement is the opposite of what is true. A process costing production report prepared using the weighted-average method is generally simpler and less costly to prepare, while one prepared using the FIFO method is more accurate but can be more costly to prepare.

Question 14

Equivalent units are calculated by multiplying the number of physical units by their percentage of completion.This is how equivalent units are calculated.

Accepted Answer

Equivalent units are calculated by taking the number of physical units that are partially completed (i.e., not yet fully processed) and multiplying them by the percentage of completion to convert them into equivalent completed units. This calculation reflects the fact that partially completed units are not yet fully equivalent to completed units in terms of labor and materials costs, so it is necessary to adjust for the differences in order to accurately measure the total amount of work done.

Question 15

Equivalent units for materials may differ from the equivalent units for conversion costs.Equivalent units may differ for the two categories since their percentage of completion may differ.

Accepted Answer

Equivalent units for materials are calculated based on the physical amount of material that has been partially or fully processed, while equivalent units for conversion costs are calculated based on the degree of completion of direct labor and manufacturing overhead. Thus, it is possible for their percentage of completion to differ and result in different equivalent units.

Question 16

Process costing does not use a Work in Process Inventory account.In process costing,there will be a separate Work in Process Inventory account for each of the major processes.

Accepted Answer

Process costing does use a Work in Process Inventory account and there will be a separate account for each process. This allows for the tracking of costs and production progress throughout each stage of the process.

Question 17

Conversion costs consist of direct labor as well as manufacturing overhead.In process costing,direct labor and manufacturing overhead are often combined into a single category called conversion costs.

Accepted Answer

Conversion costs include both direct labor and manufacturing overhead and are often treated as a single category in process costing.

Question 18

An equivalent unit is a measure used to convert costs incurred in the previous period to costs incurred in the current period.An equivalent unit is a measure used to convert partially completed units into the equivalent of a full unit.

Accepted Answer

An equivalent unit is used to convert partially completed units into the equivalent of a full unit, not to convert costs from a previous period to the current period.

Question 19

The process costing production report is used to determine how much manufacturing cost to transfer out of Finished Goods Inventory and into Cost of Goods Sold.The process costing report is used to determine how much manufacturing cost to transfer out of Work in Process Inventory and into the next processing department.

Accepted Answer

The process costing production report is used to determine how much manufacturing cost to transfer out of Work in Process Inventory and into the next processing department, not from Finished Goods Inventory to Cost of Goods Sold.

Question 20

Process costing often combines direct materials and direct labor into a single category called conversion costs.In process costing,direct labor and manufacturing overhead are often combined into a single category called conversion costs.

Accepted Answer

In process costing, conversion costs refer to the combination of direct labor and manufacturing overhead, not direct materials.

Quiz 3: Process Costing