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Which of the following best defines the difference between job order costing and process costing?

• A) Job order costing is used for mass production of identical products, while process costing is used for unique, customized products.

• B) Job order costing tracks costs for each individual job or batch, while process costing accumulates costs by department or process over a period of time.

• C) Job order costing applies only to manufacturing companies, while process costing applies only to service industries.

• D) Job order costing involves tracking direct materials and labor only, while process costing tracks overhead exclusively.

What are equivalent units in process costing?

• a) Fully completed units only.

• b) Units in beginning WIP inventory.

• c) Partially completed units converted into a measure of completed work.

• d) The number of units transferred out during the period

What does the FIFO method assume about the flow of costs in a process costing system?

• a) Costs are assigned based on the average cost of all units.

• b) Costs are assigned to the oldest units first.

• c) Costs are assigned randomly to units.

• d) Costs are assigned to the newest units first.

What is the main difference between the FIFO and Weighted Average methods in process costing?

• a) FIFO does not consider beginning inventory, while Weighted Average does.

• b) FIFO separates beginning WIP costs, while Weighted Average combines them with current costs.

• c) FIFO is only used for materials costs, while Weighted Average is for conversion costs.

• d) FIFO uses physical units, while Weighted Average uses equivalent units.

In the FIFO method, how are beginning WIP inventory costs treated?

• a) They are combined with current period costs.

• b) They are ignored completely.

• c) They are treated separately and completed first.

• d) They are split equally between completed and ending WIP units.

Beg. WIP = 225

Started = 275

End. WIP = 100

Started and Completed = ?

• 275

• 175

• 400

• 225