Question 1

To assign costs to the units in ending WIP Inventory, the company multiplies the cost per equivalent unit by the number of equivalent units for direct materials and conversion costs separately, and then sums the two amounts.

Accepted Answer

This is the correct method for assigning costs to units in ending WIP Inventory.

Question 2

The "total costs to account for" is the sum of the costs in beginning WIP Inventory plus the manufacturing costs added during the period.

Accepted Answer

Total costs to account for = Beginning WIP Inventory + Manufacturing Costs added during the period.

Question 3

The "total physical units accounted for" is the sum of the units completed and transferred out during the period plus the units in beginning WIP Inventory.

Accepted Answer

The "total physical units accounted for" equals the sum of the units completed and transferred out during the period plus the units in ending work in process (WIP) inventory, not the beginning WIP inventory.

Question 4

If a company has ending Work In Process Inventory it must use the 5-step process costing procedure to determine the cost of making one unit.

Accepted Answer

When a company has ending Work In Process Inventory, it means that some units were partially completed during the production process. To determine the cost of making one unit, the 5-step process costing procedure must be used. This procedure involves calculating equivalent units, determining the total cost of production, and dividing it by the equivalent units to get the cost per unit.

Question 5

The first step of the 5-step process costing procedure is

Accepted Answer

The first step of the 5-step process costing procedure is to summarize the flow of physical units, which involves identifying the units of input and output and their total quantities. This information is necessary for computing equivalent units and determining the cost per unit.

Question 6

The "total physical units to account for" is the sum of the units in beginning WIP Inventory plus the units started in production during the period.

Accepted Answer

This is correct. To determine the total physical units that need to be accounted for in a production process, we add the units in beginning WIP Inventory (work in progress) to the units started in production during the period.

Question 7

If a company has no ending Work In Process Inventory, it does not need to use the 5-step process costing procedure to determine the cost of making one unit.

Accepted Answer

The 5-step process costing procedure is used to determine the cost of making one unit when there is WIP inventory at the end of the accounting period. If there is no ending WIP inventory, then the cost can be calculated using the total cost of production divided by the total number of units produced.

Question 8

The existence of ending Work In Process Inventory necessitates how much of the total manufacturing cost should be assigned to units still in ending WIP Inventory, and how much of the cost should be assigned to units completed during the period.

Accepted Answer

This is true because a portion of the manufacturing cost is still in the ending WIP Inventory and needs to be allocated accordingly. The cost of completed units can be easily calculated and assigned to them.

Question 9

If a company has ending Work In Process Inventory it must use the 3-step process costing procedure to determine the cost of making one unit.

Accepted Answer

The presence of ending Work In Process Inventory does not mandate the use of a 3-step process costing procedure; companies can use various costing methods (e.g., job order costing, process costing with different steps) depending on their production process and accounting practices.

Question 10

The last step of the 5-step process costing procedure is to assign total costs to units completed and to units in ending Work In Process Inventory.

Accepted Answer

This is correct. The last step in the 5-step process costing procedure is to assign total costs to units completed and to units in ending Work In Process Inventory. This is done in order to determine the total cost of goods manufactured and to calculate the cost per unit.

Question 11

To find the "cost per equivalent unit," the "total costs to account for" are divided by the "total direct materials."

Accepted Answer

The "cost per equivalent unit" is found by dividing the "total costs to account for" by the "total equivalent units." The denominator is not "total direct materials."

Question 12

The production equivalent unit report summarizes all costs.

Accepted Answer

The production equivalent unit report summarizes the physical units completed during a period and the costs associated with those units, but not all costs. Other costs like indirect and administrative costs may not be included in the report.

Question 13

The first step of the 5-step process costing procedure is to summarize total costs to account for.

Accepted Answer

The first step of the 5-step process costing procedure is to summarize the flow of physical units of output.

Question 14

To find the "cost per equivalent unit," the "total costs to account for" are divided by the "total equivalent units."

Accepted Answer

This is the formula for calculating the cost per equivalent unit in process costing.

Question 15

The last step of the 5-step process costing procedure is to summarize the flow of physical units.

Accepted Answer

The last step of the 5-step process costing procedure is to assign total costs to units completed and to units in ending work in process.

Question 16

The existence of ending Work In Process Inventory necessitates the use of the 5-step process costing procedure.

Accepted Answer

Ending work in process inventory means that some units have been started in one accounting period and completed in the next, which requires the use of the 5-step process costing procedure to determine the cost per equivalent unit and allocate costs between the two periods.

Question 17

The "total physical units to account for" is the sum of the units in beginning WIP Inventory plus the units in ending WIP Inventory.

Accepted Answer

The "total physical units to account for" is the sum of the units started into production during the period plus the units in beginning WIP Inventory, not the sum of the units in beginning and ending WIP Inventory.

Question 18

The first step of the 5-step process costing procedure is to summarize the flow of physical units.

Accepted Answer

This is true according to the 5-step process costing procedure. The first step is to summarize the flow of physical units, followed by accounting for the equivalent units, calculating the cost per equivalent unit, allocating costs to units, and lastly reconciling the total costs.

Question 19

Total direct materials = $67,500, and there is no beginning WIP Inventory. Units completed are 15,000 with no ending Work In Process Inventory. The cost per unit is $4.50.

Accepted Answer

Total direct materials = $67,500 / Cost per unit = $4.50
Number of units completed = 15,000
Total direct material cost = Cost per unit x Number of units completed
Total direct material cost = $4.50 x 15,000 = $67,500
Since there is no beginning or ending work in process inventory, the total direct material cost of $67,500 is equal to the total cost of goods manufactured.

Question 20

The "total physical units accounted for" is the sum of the units completed and transferred out during the period plus the units in ending WIP Inventory.

Accepted Answer

The formula for total physical units accounted for is the sum of the units completed and transferred out during the period plus the units in ending WIP inventory.

Quiz 5: Process Costing