Question 1

Since the process cost summary describes the activities of a production department for a specified reporting period, it does not present information about any costs incurred in prior periods.

Accepted Answer

The answer of Since the process cost summary describes the...

Question 2

A process cost summary for a production department accounts for all costs assigned to that department during the period plus costs that were in the department's Work in Process Inventory account at the beginning of the period.

Accepted Answer

A process cost summary includes all costs assigned to the department during the period and any costs that were in the department's Work in Process Inventory account at the beginning of the period.

Question 3

The number of equivalent units of production assigned to ending Work in Process inventory should be equal to or less than the number of physical units in ending Work in Process inventory.

Accepted Answer

This is true because equivalent units of production take into account the percentage of completion for each unit in ending Work in Process inventory, so the equivalent units may be less than the physical units if there are some units that are not fully completed.

Question 4

The Finishing Department transferred out completed units with a cost of $74,000. This transfer should be recorded with the following entry:

Accepted Answer

Transferring completed units from one department to another is considered a transfer of costs and should be recorded with an entry in the accounting records.

Question 5

The cost of units transferred from Work in Process Inventory to Finished Goods Inventory is called the cost of goods manufactured.

Accepted Answer

The cost of goods manufactured includes all costs incurred during the manufacturing process, including direct materials, direct labor, and factory overhead, and is the total cost of the products that were completed during the period and transferred to finished goods inventory. Therefore, the statement is true.

Question 6

If a production department has 100 equivalent units of production with respect to direct materials in a given reporting period, the equivalent units of production with respect to direct labor must also be 100.

Accepted Answer

The equivalent units of production for different inputs (such as direct materials and direct labor) may not always be the same, as each input may have a different degree of completion in the production process.

Question 7

One section of the process cost summary describes the equivalent units of production for the department during the reporting period and presents the calculations of the direct materials and conversion costs per equivalent unit.

Accepted Answer

This statement accurately describes one section of the process cost summary.

Question 8

In the same time period, it is possible that a production department can produce 1,000 equivalent finished units with respect to direct materials and 1,200 equivalent finished units with respect to direct labor.

Accepted Answer

It is possible for a production department to produce different equivalent finished units with respect to different inputs, such as direct materials and direct labor.

Question 9

If the predetermined overhead allocation rate is 75% of direct labor cost, and the Assembly Department's direct labor cost for the reporting period is $20,000, the following entry would be made to record the allocation of overhead to the products processed in this department:

Accepted Answer

The answer of If the predetermined overhead allocation rate is...

Question 10

If the predetermined overhead allocation rate is 245% of direct labor cost, and the Baking Department's direct labor cost for the reporting period is $10,000, the following entry would be made to record the allocation of overhead to the products processed in this department:

Accepted Answer

Since the predetermined overhead allocation rate is 245% of direct labor cost, the total overhead allocated to the Baking Department is $24,500 (i.e. 245% x $10,000). Therefore, the entry to record the overhead allocation would be:
Overhead Allocation Expense     $24,500
Manufacturing Overhead               $24,500

Question 11

If a department that applies process costing starts the reporting period with 40,000 physical units that were 80% complete with respect to direct materials and 50% complete with respect to direct labor, it must add 8,000 equivalent units of direct materials and 20,000 equivalent units of direct labor to complete them.

Accepted Answer

This is correct according to the process costing method, which calculates equivalent units of production to account for incomplete physical units at the beginning of the reporting period. In this case, the department must add 8,000 equivalent units of direct materials and 20,000 equivalent units of direct labor to account for the work needed to complete the initial 40,000 physical units.

Question 12

Once equivalent units are calculated for materials, this number will also be used for direct labor and factory overhead.

Accepted Answer

Equivalent units for materials, direct labor, and factory overhead may differ because they can be added at different stages of the production process.

Question 13

Which of the following products is most likely to be produced in a process operations system?
A) Airplanes
B) Cereal
C) Bridges
D) Designer bridal gowns
E) Custom cabinets

Accepted Answer

Process operations systems are typically used for producing high quantity, standardized products such as cereal that can be easily replicated with a consistent level of quality. Airplanes, bridges, designer bridal gowns, and custom cabinets are more likely to be produced using job shop, batch, or assembly line production systems.

Question 14

Which of the following products is least likely to be produced in a process operations system?
A) Compact disks
B) Slacks for casual wear
C) Baseball hats
D) Calculators
E) Custom cabinets

Accepted Answer

The answer of Which of the following products is least...

Question 15

In process costing, all indirect materials are charged directly to Work in Process Inventory.

Accepted Answer

In process costing, indirect materials are charged to the Manufacturing Overhead account, not directly to Work in Process Inventory. The Manufacturing Overhead account is then allocated to the appropriate job or department based on a predetermined allocation rate.

Question 16

Which of the following characteristics does not usually apply to process operations systems?
A) Each unit of product is separately identifiable.
B) Partially completed products are transferred between processes.
C) Different managers are responsible for different processes.
D) The output of all processes except the final process is an input to the next process.
E) Costs are computed using equivalent units.

Accepted Answer

The answer of Which of the following characteristics does not...

Question 17

If the predetermined overhead allocation rate is 250% of direct labor cost and the Finishing Department's direct labor cost for the reporting period is $20,000, the following entry would record the allocation of overhead to the products processed in this department:

Accepted Answer

If the predetermined overhead allocation rate is 250% of direct labor cost and the Finishing Department's direct labor cost for the reporting period is $20,000, the overhead allocated to the department would be $50,000 (250% × $20,000). This overhead allocation would be recorded with a journal entry debiting Finished Goods Inventory or Work-in-Process Inventory, and crediting Manufacturing Overhead.

Question 18

The process cost summary presents calculations of the cost of units completed during the reporting period, but does not present any information about the ending Work in Process inventory.

Accepted Answer

The process cost summary does present information about the ending Work in Process inventory, which is necessary for calculating the cost of goods manufactured.

Question 19

A process costing system records all factory overhead costs directly in the Work in Process Inventory accounts.

Accepted Answer

In a process costing system, factory overhead costs are not recorded directly in the Work in Process Inventory accounts. Instead, they are assigned to the production departments or cost centers where they are incurred and then allocated to the appropriate Work in Process Inventory accounts using a predetermined overhead rate.

Question 20

If a department that applies process costing starts the reporting period with 50,000 physical units that were 25% complete with respect to direct materials and 40% complete with respect to direct labor, it must add 12,500 equivalent units of direct materials and 20,000 equivalent units of direct labor to complete them.

Accepted Answer

The answer of If a department that applies process costing...

Quiz 3: Process Costing and Analysis