Product and Service Costing: A Process Systems Approach

In order to compute equivalent units of production using the Weighted Average method of process costing, the following equation should be used:

• Equivalent units of beginning work in process + units completed and transferred out

• Equivalent units of beginning work in process + equivalent units of ending work in process

• Units completed and transferred out + equivalent units of ending work in process

• Units completed and transferred out + equivalent units of beginning work in process

If beginning work in process is 2,000 units, ending work in process is 1,000 units, and the units accounted for equals 5,000 units, what are the units completed and transferred out?

• 7000

• 6000

• 4000

• 2000

One characteristic of products that are mass-produced in a continuous production process 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.

Conversion costs are the sum of:

• Direct materials costs and direct labor costs

• Indirect materials costs and indirect labor costs

• Direct materials costs and overhead costs

• Direct labor costs and overhead costs

A production cost report

• Used to record the costs chargeable to a specific job

• Shows only cost data for a production department

• Provides a basis for evaluating the productivity of a department

• Combines process cost and job order costing systems costs

Which is not a similarity between job order costing and process costing?

• Methods of assigned costs

• Tracking of direct materials, direct labor and manufacturing overhead

• Accumulating journal entries

• Flow of costs

The journal entry that assigns raw materials costs in a process costing system includes

• Debit to raw materials

• Credit to raw materials

• Debit to Accounts Payable

• Credit to Work in Process

Calculating equivalent units in a weighted average method:

• The beginning inventory percentage complete is used only for conversion costs

• The beginning inventory percentage complete is used for both material and conversion costs

• The beginning inventory amount is not accounted for

• The beginning inventory amount is used in total

In a process costing system, manufacturing overhead is assigned to work in process by

• Department based on actual overhead costs incurred

• Department based on predetermined overhead rates

• Job based on actual overhead costs incurred

• Job based on predetermined overhead rates

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