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WorksheetsAA025 Chapter 8 : Process Costing
Total questions: 40
Worksheet time: 40mins
PROCESS COSTING system focuses on the process involved in mass-producing products that are very similar in nature.
TRUE
FALSE
Which industry would more likely to use a PROCESS COSTING system?
Travel & Tours Agencies
Entertainment & Documentary Production
Canned Food Manufacturing
Business Consultation Company
In a PROCESS COSTING system, costs are tracked through a series of connected manufacturing processes or departments, rather than by individual jobs.
TRUE
FALSE
Separate work in process inventory accounts is maintained for each processing department or manufacturing process in a PROCESS COSTING system.
TRUE
FALSE
In a PROCESS COSTING system, materials, labour, and overhead costs are only added in the first production department.
TRUE
FALSE
Equivalent units of production are used to determine the cost per unit of completed products.
TRUE
FALSE
Equivalent units of production measure the work done during a period, expressed in fully completed units.
TRUE
FALSE
The weighted-average method of computing equivalent units is the most widely used method in practice.
TRUE
FALSE
There are no units in process at the beginning of the period, 1,500 units in process at the end of the period that are 40% complete, and 15,000 units transferred out during the period. Based on this information, there were 14,400 equivalent units of production during the period.
TRUE
FALSE
The first step performed in preparing a Production Cost Report is computing the equivalent units of production.
TRUE
FALSE
Equivalent units of production must be calculated before the unit production costs can be computed.
TRUE
FALSE
The physical units in a department are another name for the equivalent units of production.
TRUE
FALSE
Direct material cost per equivalent unit is computed by taking total material costs charged to the department for the period and dividing by the physical units in the process during the period.
TRUE
FALSE
When equivalent units of production are different for materials and conversion costs, unit costs are computed for materials, conversion, and totaled them up.
TRUE
FALSE
The total manufacturing cost per unit is used in costing the units completed and transferred-out during the period.
TRUE
FALSE
A Production Cost Report is an internal document for management that shows production quantity and cost data for a particular job.
TRUE
FALSE
Production Cost Reports provide a basis for evaluating the productivity of a department.
TRUE
FALSE
Companies can use a combination of a PROCESS COSTING and a JOB-ORDER COSTING system at the same time.
TRUE
FALSE
One similarity of the PROCESS COSTING system with the JOB-ORDER COSTING system is that both determine total manufacturing costs after each job.
TRUE
FALSE
The flow of costs in a PROCESS COSTING system requires that materials be added in one department, labor added in another department, and manufacturing overhead in a third department.
TRUE
FALSE
When finished goods are sold, the entry to record the cost of goods sold is a debit to the Finished Goods Inventory account and a credit to the Cost of Goods Sold account.
TRUE
FALSE
When there is no beginning and no ending work in process; and materials are entered at the beginning of the process, equivalent units of materials are the same as the units started into 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 processing system 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.
A PROCESS COSTING system would be used for all of the following products except...
chemicals
computer chips
soft drinks
motion pictures
In a PROCESS COSTING system..,
a Work in Process Inventory account is maintained for each product.
a Work in Process Inventory account is maintained for each processing department.
one Work in Process Inventory account is maintained for all the processes, similar to a job order cost system.
a materials requisition must identify the job on which the materials will be used.
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 processing department.
In process costing systems, costs are summarized in the Job Cost Sheets.
Unit costs are not computed in process costing systems.
Which of the following manufacturing cost elements occurs in a PROCESS COSTING system?
Direct materials.
Direct labour.
Manufacturing overhead.
All of these.
In a PROCESS COSTING system, product costs are summarized:...
in the Job Cost Sheets.
in the Production Cost Reports.
after each unit is produced.
when the products are sold.
When manufacturing overhead costs are assigned to production in a PROCESS COSTING system, they are debited to
the Finished Goods Inventory account.
Cost of Goods Sold.
a Manufacturing Overhead account.
a Work in Process Inventory account.
A product requires processing in two departments, the Baking Department and then the Packaging Department, before it is completed. Costs transferred out of the Baking Department will be transferred to:...
Finished Goods Inventory.
Cost of Goods Sold.
Work in Process Inventory—Packaging Department.
Manufacturing Overhead.
Which of the following would not appear as a debit in the Work in Process Inventory account of a second department in a two stage production process?
Direct materials used.
Overhead applied.
Direct labour assigned.
Cost of products transferred out.
Barnes and Miller Manufacturing is trying to determine the equivalent units for conversion costs with 10,000 units of ending work in process at 80% completion and 32,000 physical units. There are no beginning units in the department. Conversion costs occur evenly throughout the entire production period. What are the total equivalent units for conversion costs for the current period?
42,000
40,000
8,000
30,000
20,000 units in a process that are 70% complete are referred to as:
20,000 equivalent units of production.
6,000 equivalent units of production.
14,000 equivalent units of production.
6,000 equivalent units of production.
Which of the following items is NOT characteristic of a process costing system?
Once production begins, it continues until the finished product emerges
The products produced are heterogeneous in nature
The focus is on continually producing homogeneous products
When the finished product emerges, all units have precisely the same amount of materials, labour and overhead
Conversion costs are the sum of:
Fixed and variable overhead costs
labour costs and overhead costs
Direct material costs and overhead costs
Direct labour and indirect labour costs
The total costs accounted for in a production cost report equal the
cost of units completed and transferred out only.
cost of units started into production.
cost of units completed and transferred out plus the cost of ending work in process.
cost of beginning work in process plus the cost of units completed and transferred out.
Which is true of process costing?
Overhead is assigned only to the last process
Costs are accumulated in each processing department
it tracks and assigns both period and product costs
It uses only one Work-in-Process Inventory account
Process costing is applicable in _________.
construction industry
ship building industry
airline company
Pharmaceutical industry
