CMA I - Process Costing

Which of the following companies is most likely to use a process costing system?

• A law office

• A custom home builder

• A car repair business

• A food manufacturer

A cost incurred in one processing department that s transferred to the next processing department is called a

• Transferred-in cost

• Split cost

• Conversion cost

• Overhead cost

When partially completed units are converted to a comparable number of completed units, they are referred to as?

• Converted units

• Equitable units

• Equivalent units

• Split-off units

A process costing system is used by a company that?

• Accumulates costs by job

• Produces items by special request of customers

• Produce homogeneous products

• Produces heterogenous products

Expected Output is equal to

• Input – Abnormal Loss

• Input – Normal Loss

• Input – Abnormal Gain

• NONE

Process costing is applied when

• small number of different products are manufactured

• large number of different products are manufactured

• large number of identical products are manufactured

• small numbers of customized made-to-order products are manufactured

Unit Cost is equal to

• Normal Cost ÷ Normal Output

• Total Cost ÷ Normal Output

• Normal Cost ÷ Total Output

• Total Cost ÷ Total Output

400 litres of a chemical were manufactured in a period. There is a normal loss of 25% of the material input into the process. What is the expected litres of output?

• 300 litres

• 100 litres

• 200 litres

• 350 litres

Input in a process is 4000 units and normal loss is 20%. When finished output in the process is only 3,240 units, there is an

• Abnormal loss of 40 units

• Abnormal gain of 40 units

• Neither abnormal loss nor gain

• Abnormal loss of 60 units

An abnormal gain in a process occurs in which of the following situations?

• When actual losses are greater than the normal loss level.

• When costs are reduced through increased machine speed

• When actual losses are less than the normal level.

• When the process output is greater than planned.