PROCESS COSTING

What is process costing primarily used for?

• Retail businesses

• Service-based industries

• Manufacturing industries

• Financial institutions

In process costing, costs are accumulated by:

• Customer

• Department

• Job

• Product

Which of the following industries is most likely to use process costing?

• Custom furniture manufacturing

• Handmade jewelry production

• Automobile assembly line

• Boutique bakery

What is the primary advantage of process costing?

• It is suitable for small-scale production.

• It is simple and easy to implement.

• It provides detailed cost information for each product.

• It helps in identifying the cost of each job.

Which of the following is a characteristic of process costing?

• Customized products

• Unique production methods

• Mass production

• High variability in product costs

In process costing, which costs are typically considered direct costs?

• Administrative salaries

• Depreciation of factory equipment

• Factory rent and utilities

• Materials and direct labor

What is the equivalent unit of production?

• The number of units sold during the period

• The number of units in process multiplied by the percentage completion

• The total units produced during the period

• The total units completed during the period

Which of the following methods is commonly used to calculate equivalent units of production?

• Weighted average method

• LIFO method

• Specific identification method

• FIFO method

What is the main purpose of calculating equivalent units of production?

• To determine the number of units sold

• To determine the total production capacity

• To assign costs to partially completed units

• To calculate the cost per unit of production

Which of the following is not a typical step in the process costing system?

• Calculating contribution margin per unit

• Computing equivalent units of production

• Assigning total costs to units completed and in process

• Allocating fixed overhead costs based on machine hours