Chapter 8 : Process Costing

Process costing is a method of costing used in what type of industries?

• Manufacturing
• Construction
• Transportation
• Hospitality

Process costing systems are used to apply costs to a specific job, such as the manufacturing of a specialized machine.

• TRUE

• FALSE

Equivalent units of production must be calculated before the unit production costs can be computed.

• TRUE

• FALSE

The first step performed in preparing a production cost report is computing the equivalent units of production.

• TRUE

• FALSE

The physical units in a department are another name for the equivalent units of production.

• TRUE

• FALSE

A process costing system is most appropriate when..

• a variety of different products are produced, each one requiring different types of materials, labor, and overhead.

• the focus of attention is on a particular job or order.

• similar products are mass-produced.

• individual products are custom made to the specification of customers.

A characteristic of products that are mass-produced in a continuous fashion is that..

• the products are identical or very similar in nature.

• they are grouped in batches.

• they are produced at the time an order is received.

• their costs are accumulated on job cost sheets.

Which of these statements best reflects a major distinguishing factor between a job-order costing system and a process costing system?

• The manufacturing cost elements included.

• The time period each covers.

• The detail at which costs are calculated.

• The number of work in process inventory accounts.

Which of the following is a true statement about process costing systems?

• In process costing systems, costs are accumulated but not assigned.

• A process costing system has one work in process inventory account for each process.

• In process costing systems, costs are summarized on job cost sheets.

• Unit costs are not computed in process costing systems.

In a process costing system, product costs are summarized:...

• on job cost sheets.

• on production cost reports.

• after each unit is produced.

• when the products are sold.