Question 1

Both job-order and process costing systems use averaging to compute unit product costs.

Accepted Answer

Both job-order and process costing systems use averaging to compute unit product costs. In job-order costing, the costs are divided by the number of units produced, while in process costing, the costs are divided by the total number of units produced during a certain period.

Question 2

When materials are purchased in a process costing system, a materials account is debited with the cost of the materials.

Accepted Answer

In a process costing system, materials are assigned to a materials account, which is debited when materials are purchased. This is done to keep track of the materials used in the production process and their cost.

Question 3

The "costs accounted for" portion of the cost reconciliation report includes the cost of beginning work in process inventory and the costs added to production during the period.

Accepted Answer

False

Question 4

In calculating cost per equivalent unit under the weighted-average method, prior period costs are not combined with current period costs.

Accepted Answer

Under the weighted-average method, prior period costs are combined with current period costs to calculate the cost per equivalent unit.

Question 5

Costs are accumulated by department in a process costing system.

Accepted Answer

In a process costing system, costs are accumulated and assigned to each department, making it easier to calculate the cost per unit of the product produced in that particular department.

Question 6

The "costs accounted for" portion of the cost reconciliation report includes the cost of beginning work in process inventory and the cost of units transferred out.

Accepted Answer

The "costs accounted for" portion of the cost reconciliation report includes the cost of units transferred out and the cost of ending work in process inventory, not the beginning work in process inventory.

Question 7

In order to equitably allocate costs in a process costing system, dissimilar products are restated in terms of equivalent units by weighting the number of units produced by their market values.

Accepted Answer

In a process costing system, dissimilar products are restated in terms of equivalent units by weighting the number of units produced by their physical characteristics, such as weight or volume, not by their market values. Cost allocation is based on the same physical unit of measure for all products.

Question 8

Pulo Corporation uses a weighted-average process costing system. The company has two processing departments. Production starts in the Assembly Department and is completed in the Finishing Department. The units completed and transferred out of the Assembly department during April will become the:

Accepted Answer

The units completed and transferred out of the Assembly Department during April will become the units started in production in the Finishing Department for April.

Question 9

The "costs to be accounted for" portion of the cost reconciliation report includes the cost of ending work in process inventory and the costs added during the period.

Accepted Answer

The "costs to be accounted for" portion includes the beginning work in process inventory and the costs added during the period, not the ending work in process inventory.

Question 10

Using process costing, it is necessary to consider the stage of completion of the units when assigning conversion cost to partially completed units in the ending work in process inventory.

Accepted Answer

Process costing involves assigning costs to each unit produced based on the total costs incurred in the production process. When units are partially completed, it is necessary to estimate the percentage of completion and assign conversion costs accordingly. This is because the cost of producing each unit varies depending on how much work has already been done. As such, it is important to consider the stage of completion of the units when assigning conversion cost to partially completed units in the ending work in process inventory.

Question 11

Which of the following journal entries would be used to record application of manufacturing overhead to work in process in a process costing system with two processing departments, department A and department B?

Accepted Answer

The answer of Which of the following journal entries would...

Question 12

Under the weighted-average method, the equivalent units used to compute the unit costs of ending inventories relate only to work done during the current period.

Accepted Answer

The weighted-average method considers both the work done in the current period and the work done in prior periods when computing equivalent units for ending inventories.

Question 13

The "costs to be accounted for" portion of the cost reconciliation report includes the cost of beginning work in process inventory and the costs added during the period.

Accepted Answer

The cost of beginning work in process inventory and the costs added during the period are part of the costs to be accounted for in the cost reconciliation report.

Question 14

Process costing is used in those situations where many different products or services are produced each period to customer specifications.

Accepted Answer

Process costing is used when a large number of identical products are produced in a continuous flow, rather than to customer specifications.

Question 15

Under the weighted-average method of process costing, costs from the prior period are averaged with those of the current period in computing unit costs.

Accepted Answer

The statement is true. The weighted-average method of process costing involves averaging the costs from the prior period with those of the current period to compute the unit costs. This method is commonly used in process industries where the cost of production is accumulated over a long period of time.

Question 16

Operation costing is a hybrid system that employs certain aspects of both job-order and process costing.

Accepted Answer

Operation costing is a combination of job-order and process costing where the products or services produced are similar to each other but not identical. It is used in industries where production is done in stages or operations, such as in the manufacturing of automobiles, electronics, and chemicals.

Question 17

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

The answer of The following journal entry would be made...

Question 18

A job-order cost system would be used to account for the cost of building an oil tanker.

Accepted Answer

A job-order cost system is used for products or services that are unique, customized or are produced in limited quantities. Building an oil tanker would be a unique and customized project, and therefore a job-order cost system is appropriate for accounting for the cost of constructing the tanker.

Question 19

The units in beginning work in process inventory plus the units in ending work in process inventory must equal the units transferred out of the department plus the units started into production.

Accepted Answer

The correct equation is: Units in beginning work in process inventory + Units started into production = Units transferred out + Units in ending work in process inventory.

Question 20

Which of the following statements about a process costing system is incorrect?

Accepted Answer

In a process costing system, materials costs are not traced to individual units of products, but rather are averaged across all units produced during a particular period. This is because process costing systems assume that all units in a particular production batch are identical and therefore should be allocated the same amount of costs.

Quiz 7: Process Costing