Question 1

When computing the cost per equivalent unit,it is not necessary to consider the percentage completion of the units in beginning inventory under the weighted-average method.

Accepted Answer

Under the weighted-average method, the cost per equivalent unit is calculated by dividing the total cost of work done to date (including beginning inventory) by the total equivalent units of work done to date (including beginning inventory). The weighted-average method blends together the beginning inventory costs and the current period costs, so the percentage completion of beginning inventory is not separately considered in the calculation.

Question 2

A company should use process costing,rather than job order costing,if:

Accepted Answer

Process costing is the best choice when the product is composed of mass-produced homogeneous units. This is because process costing assigns the average cost of production to each unit, which is appropriate for products that are identical or nearly identical. Job order costing, on the other hand, is best used when each unit is unique or when production is completed in batches for specific customer orders. Choices A, B, and D do not necessarily indicate a preference for either process costing or job order costing.

Question 3

Process costing would be used by companies producing the following items: bricks,bolts,pharmaceutical items,natural gas,and electricity.

Accepted Answer

Process costing is used for industries where mass production takes place, such as bricks, bolts, pharmaceutical items, natural gas, and electricity.

Question 4

In process costing,the equivalent units computed for materials is generally the same as that computed for direct labor.

Accepted Answer

In process costing, equivalent units for materials and direct labor may differ because materials are often added at different stages of production, whereas labor is applied more uniformly throughout the process.

Question 5

The job cost sheet is used in both job-order and process costing.

Accepted Answer

The job cost sheet is primarily used in job-order costing to track costs for individual jobs, whereas process costing uses different methods to accumulate costs for continuous production processes.

Question 6

A process costing system:

Accepted Answer

A process costing system uses a separate Work in Process account for each processing department. This allows for more accurate tracking of costs and progress for each individual department.

Question 7

A process costing system would be best suited for production of a large quantity of a homogeneous product.

Accepted Answer

A process costing system is designed for mass production of a standardized product. It calculates the average cost per unit of output, which is useful for businesses that produce large quantities of a homogeneous product. This helps in determining the cost of production of each unit and setting up appropriate pricing strategies. Therefore, it is best suited for businesses with a continuous flow of production and limited variation in product specifications.

Question 8

The Nichols Company uses the weighted-average method in its process costing system.The company recorded 29,500 equivalent units for conversion costs for November in a particular department.There were 6,000 units in the ending work in process inventory on November 30,75% complete with respect to conversion costs.The November 1 work in process inventory consisted of 8,000 units,50% complete with respect to conversion costs.A total of 25,000 units were completed and transferred out of the department during the month.The number of units started during November in the department was:

Accepted Answer

Beginning work in process inventory + Units started into production = Ending work in process inventory + Units completed and transferred out
Units started into production = Ending work in process inventory + Units completed and transferred out - Beginning work in process inventory
= 6,000 + 25,000 - 8,000 = 23,000

Question 9

In process costing,costs are accumulated in processing departments,rather than by job.

Accepted Answer

In process costing, costs are accumulated in processing departments which process similar products, rather than by individual jobs.

Question 10

In a process costing system,overhead costs are traced to units of product as they are incurred.

Accepted Answer

In a process costing system, overhead costs are allocated to units of product based on a predetermined overhead rate, not traced directly as they are incurred.

Question 11

A process cost system would be used to account for the cost of manufacturing an oil tanker.

Accepted Answer

A process cost system is used for mass production of similar items, whereas an oil tanker, being a large and unique product, would typically use a job order cost system.

Question 12

When assigning costs to partially completed units in the ending work in process inventory,it is not necessary to consider the percentage completion of the units under the weighted-average method.

Accepted Answer

The weighted-average method requires considering the percentage completion of units to accurately assign costs to partially completed units in the ending work in process inventory.

Question 13

The weighted-average method of process costing can only be used if materials are added at the beginning of the production process.

Accepted Answer

The weighted-average method of process costing can be used regardless of when materials are added in the production process. It calculates the average cost per unit by combining the costs of beginning work in process inventory and costs incurred during the period, and dividing it by total equivalent units produced.

Question 14

Which of the following characteristics applies to process costing,but does not apply to job order costing?

Accepted Answer

Job order costing deals with individual, unique jobs, whereas process costing involves the production of homogeneous goods or services over a period of time. Therefore, process costing requires the use of equivalent units of production to calculate the cost per unit, while job order costing does not. The other options (A, C, and D) all apply to both process costing and job order costing.

Question 15

Under the weighted-average method,the cost of materials in the beginning work in process inventory is not used in the computation of the cost per equivalent unit for materials.

Accepted Answer

The answer of Under the weighted-average method,the cost of materials...

Question 16

In a process costing system,manufacturing overhead applied is usually recorded as a debit to:

Accepted Answer

In a process costing system, manufacturing overhead applied is recorded as a debit to Work in Process to allocate overhead costs to the production process.

Question 17

Equivalent units for a process costing system using the weighted-average method would be equal to:

Accepted Answer

The weighted-average method calculates equivalent units by adding the units completed and transferred out during the period to the equivalent units in the ending work in process inventory.

Question 18

The Assembly Department started the month with 14,000 units in its beginning work in process inventory.An additional 296,000 units were transferred in from the prior department during the month to begin processing in the Assembly Department.There were 14,000 units in the ending work in process inventory of the Assembly Department. How many units were transferred to the next processing department during the month?

Accepted Answer

Beginning work in process inventory + Units started into production or transferred in = Ending work in process inventory + Units completed and transferred out
Units started into production or transferred in = Ending work in process inventory + Units completed and transferred out - Beginning work in process inventory
= 14,000 + 296,000 - 14,000 = 296,000

Question 19

The cost of beginning inventory under the weighted-average method is:

Accepted Answer

Under the weighted-average method, the beginning inventory cost is added in with the current period costs in determining costs per equivalent unit for a given period. This is because the cost per equivalent unit is calculated by dividing the total cost (beginning inventory cost + current period cost) by the total equivalent units. Therefore, the beginning inventory cost is included in the cost per equivalent unit calculation.

Question 20

The following journal entry would be made in a processing costing system when units that have been completed with respect to the work done in Processing Department Z are transferred from Processing Department Z to Processing Department Y:

Accepted Answer

This is a true statement as in a processing costing system, when units are completed in one department, they are transferred to the next department for further processing. The transfer is recorded using a journal entry to reflect the cost of the units transferred from one department to another.

Quiz 3: Process Costing