Question 1

The production cost report for Department 2 shows that $452,000 was assigned to the 59,000 units transferred to Finished Goods Inventory.This cost assigned to Finished Goods Inventory is recorded with a debit to Work-in-Process-Department 2.

Accepted Answer

11ea86d6_836b_4582_92b6_c51b18809de5_TB2804_00

Question 2

The production cost report for Department 1 shows that $154,000 was assigned to the 36,000 units transferred to Department 2.This transfer cost assigned to units transferred to Department 2 is recorded with a debit to Work-in-Process-Department 2.

Accepted Answer

11ea86d6_836b_1e71_92b6_cfc3bb8f9c79_TB2804_00

Question 3

Production cost reports prepared using the first-in,first-out (FIFO)method assume that the first units started in the production process are the first units completed and transferred out.

Accepted Answer

FIFO assumes that the first units started in the production process are the first units completed and transferred out, which is reflected in the production cost reports prepared using this method.

Question 4

When finished products are sold,Cost of Goods Sold is debited and Finished Goods Inventory is credited.

Accepted Answer

This is correct accounting treatment for the sale of finished goods. Cost of Goods Sold is debited to recognize the cost of the inventory that has been sold, and Finished Goods Inventory is credited to decrease the balance of that inventory account.

Question 5

The production cost report for Department 2 shows that $457,000 was assigned to the 51,000 units transferred to Finished Goods Inventory.Cost of goods sold equals $457,000.

Accepted Answer

Cost of goods manufactured equals $457,000.

Question 6

In a process costing system,costs can be controlled with the aid of a production cost report.

Accepted Answer

A production cost report in a process costing system helps to track and control costs by summarizing the total costs incurred during the production process and identifying the cost per unit of output. This information can be used to identify areas where costs can be reduced or optimized.

Question 7

Production cost reports prepared using the first-in,first-out (FIFO)method determine the cost of equivalent units of production by accounting for beginning inventory costs separately from current period costs.

Accepted Answer

This statement is true. FIFO method separates the costs of beginning inventory from the costs incurred during the current period, in order to determine the cost of equivalent units of production.

Question 8

A production cost report cannot be used for the pricing of products because it depicts only the ways to control product costs.

Accepted Answer

A production cost report can be used for pricing products as it provides detailed information on the costs incurred during production, which can help in setting product prices by ensuring they cover costs and desired profit margins.

Question 9

Production cost reports prepared using the first-in,first-out (FIFO)method assume that the first units started in the production process are the last units completed and sold.

Accepted Answer

Production cost reports prepared using the FIFO method assume that the first units started in the production process are the first units completed and sold, not the last.

Question 10

In most organizations,managers are often rewarded based on how well they meet the budget.

Accepted Answer

In many organizations, meeting the budget is a key performance indicator for managers and can impact their performance evaluations and potential for bonuses or promotions.

Question 11

Production cost reports prepared using first-in,first-out (FIFO)method determine the average cost of equivalent units of production by combining beginning inventory costs with current period costs.

Accepted Answer

Production cost reports prepared using FIFO method only consider the costs incurred during the current period and do not include beginning inventory costs. Therefore, they do not determine the average cost of equivalent units of production by combining beginning inventory costs with current period costs.

Question 12

A production cost report can help managers identify the most profitable products.

Accepted Answer

A production cost report provides information on the actual costs involved in producing a product, including direct materials, labor, and overhead. By comparing this information with sales revenue, managers can identify the products that generate the highest profits and make strategic decisions to increase profitability.

Question 13

List five ways in which managers use a production cost report to make decisions for their companies.

Accepted Answer

The answer of List five ways in which managers use...

Question 14

A production cost report provides inventory and cost of goods sold data that are needed for the balance sheet.

Accepted Answer

A production cost report is used to track the costs of producing goods, including direct materials, direct labor, and overhead costs. This report is crucial for determining the cost of goods sold, as well as the value of inventory that remains on hand at the end of a reporting period. Therefore, it provides important data for the balance sheet.

Question 15

The production cost report for Department 2 shows that $454,000 was assigned to the 50,000 units transferred to Finished Goods Inventory.Cost of goods manufactured equals $454,000.

Accepted Answer

The production cost report shows that $454,000 was assigned to the units transferred to Finished Goods Inventory, which means that this is the cost of goods manufactured. So, option A is true.

Question 16

A production cost report helps managers identify the costs that can be reduced in the production process.

Accepted Answer

A production cost report analyzes the costs incurred during the production process, which helps managers identify areas where costs can be reduced, and ultimately improve profitability. Therefore, the statement is true.

Question 17

Gatherer,Inc.uses a process costing system.It prepares a production cost report for each processing department.How will the managers of Gatherer use these production cost reports to prepare the balance sheet at the end of an accounting period?

Accepted Answer

Production cost reports provide information on the cost of goods manufactured in each processing department. This information is used to calculate the balance of inventory accounts for each department, which is then used to prepare the balance sheet at the end of the accounting period.

Question 18

Which of the following is not a way in which managers use the production cost reports to make decisions for their companies?

Accepted Answer

Production cost reports primarily focus on analyzing and controlling product costs rather than period costs, which are more related to the time period in which they are incurred rather than directly to production.

Question 19

Which of the following is an example of how managers use product cost reports to control costs?

Accepted Answer

Product cost reports provide information on the cost of production, including material, labor, and overhead costs. Managers can use this information to compare the cost of production with the selling price of the product to ensure that the product is generating enough profit to cover its costs. If the product is not generating enough profit, managers may consider acquiring newer, more efficient equipment to reduce the cost of production and improve profitability.

Question 20

A production cost report aids in preparing an income statement by providing data for ________.

Accepted Answer

A production cost report tracks the production costs and helps to determine the cost of goods sold during the period. This information is necessary in preparing an income statement.

Quiz 18: Process Costing