-
PROCESS COSTING
TRUE/FALSE
1.
Examples of industries that would use
process costing include the
pharmaceutical and semiconductor
industry.
Answer
:
True
Difficulty
:
1
Objective
:
1
Terms to Learn
:
process-costing system
2.
The principal difference
between process costing and job costing is that in
job
costing an averaging process is
used to compute the unit costs of products or
services.
Answer
:
False
Difficulty
:
2
Objective
:
1
Terms to Learn
:
process-costing system
The averaging process is used to
calculate unit costs in process costing.
3.
Process-
costing systems separate costs into cost
categories according to the
timing of
when costs are introduced into the process.
Answer
:
True
Difficulty
:
2
Objective
:
1
Terms to Learn
:
process-costing system
4.
Estimating the degree of
completion for the calculation of equivalent units
is
usually easier for conversion costs
than it is for direct materials.
Answer
:
False
Difficulty
:
2
Objective
:
1
Terms to
Learn
:
equivalent units
Estimating the degree of
completion is easier for the calculation of direct
materials since direct materials can be
measured more easily than conversion
costs.
5.
Process costing would be most likely
used by a firm that produces
heterogeneous products.
Answer
:
False
Difficulty
:
1
Objective
:
1
Terms to
Learn
:
process costing
Process costing would be
most likely used by a firm that produces
homogeneous
products.
6.
7.
8.
9.
The last step in a
process-costing system is to determine the
equivalent units for
the period.
Answer
:
False
Difficulty
:
2
Objective
:
2
Terms to Learn
:
process costing
The last
step in a process-costing system is to assign the
costs incurred to
completed units and
to units in ending work in process.
Equivalent units are calculated
separately for each input.
Answer
:
True
Difficulty
:
2
Terms to Learn
:
equivalent units
Objective
:
3
In a process-costing system, there is
always a separate Work-in-Process account
for each different process.
Answer
:
True
Difficulty
:
2
Terms to Learn
:
process costing
Objective
:
3
Process-costing journal entries and
job-costing journal entries are similar with
respect to direct materials and
conversion costs.
Answer
:
True
Difficulty
:
2
Objective
:
4
Terms to Learn
:
process-costing system
10.
The accounting (for a
bakery) entry to record the transfer of rolls from
the
mixing department to the baking
department is:
Work in Process-Mixing Department
Work in
Process-Baking Department
Answer
:
False
Difficulty
:
2
Objective
:
4
Terms to Learn
:
process-costing system
The correct accounting entry is the
opposite of the entry shown here.
11.
The weighted-average
process costing method does not distinguish
between
units started in the previous
period but completed during the current period and
units started and completed during the
current period.
Answer
:
True
Difficulty
:
2
Objective
:
5
Terms to Learn
:
weighted-average process-costing method
12.
Equivalent
units in beginning work in process + equivalent
units of work done
in the current
period equals equivalent units completed and
transferred out in the
current period
minus equivalent units in ending work in process.
Answer
:
False
Difficulty
:
2
Objective
:
5
Terms to Learn
:
equivalent units
The second part of the equation should
be: equivalent units completed and
transferred out in the current period
PLUS equivalent units in ending work in
process.
13.
In the weighted-average costing method,
the costs of direct materials in
beginning inventory are not included in
the cost per unit calculation since direct
materials are almost always added at
the start of the production process.
Answer
:
False
Difficulty
:
2
Objective
:
5
Terms to Learn
:
weighted-average process-costing method
The costs of the direct
materials are included in the cost per unit
calculation.
14.
The weighted-average cost is the total
of all costs entering the Work-in-Process
account (whether they are from
beginning work-in-process or from work started
during the current period) divided by
total equivalent units of work done to date.
Answer
:
True
Difficulty
:
2
Objective
:
5
Terms to Learn
:
weighted-average process-costing method
15.
The
equivalent units are not needed in a weighted-
average system, because all
costs are
just averaged.
Answer
:
False
Difficulty
:
2
Objective
:
5
Terms to Learn
:
equivalent units, weighted-average
process-costing method
The
equivalent units are needed in a weighted-average
system, even though all
costs are
averaged.
16.
The cost of units completed can differ
materially between the weighted average
and the FIFO methods of process
costing.
Answer
:
True
Difficulty
:
2
Objective
:
5, 6
Terms to Learn
:
weighted-average process-costing
method, first-in, first-out
(FIFO)
process-costing method
17.
The first-in, first-out (FIFO) process
costing method assigns the cost of the
pr
evious accounting period’s
equivalent units in beginning work
-in-
process
inventory to the first units
completed and transferred out of the process.
Answer
:
True
Difficulty
:
2
Objective
:
6
Terms to Learn
:
first-in, first-out (FIFO) process-
costing method
18.
A
distinctive feature of the FIFO process costing
method is that the work done
on
beginning inventory before the current period is
averaged with work done in
the current
period.
Answer
:
False
Difficulty
:
2
Objective
:
6
Terms to Learn
:
first-in, first-out (FIFO) process-
costing method
A distinctive feature of the FIFO
process costing method is that the work done
on beginning inventory before the
current period is kept separate from work
done in the current period.
19.
The FIFO process costing
method merges the work and the costs of the
beginning inventory with the work and
the costs done during the current period.
Answer
:
False
Difficulty
:
2
Objective
:
6
Terms to Learn
:
first-in, first-out (FIFO) process-
costing method
FIFO only
includes the work done during the current period.
20.
The first-
in, first-out process-costing method assumes that
units in beginning
inventory are
completed during the current accounting period.
Answer
:
True
Difficulty
:
2
Objective
:
6
Terms to Learn
:
first-in, first-out (FIFO) process-
costing method
MULTIPLE
CHOICE
21.
Costing systems that are used for the
costing of like or similar units of products
in mass production are called:
a.
inventory-
costing systems
b.
job-costing systems
c.
process-costing systems
d.
weighted-
average costing systems
Answer
:
c
Difficulty
:
1
Objective
:
1
Terms to Learn
:
process-costing system
22.
Which of the following
manufactured products would not use process
costing?
a.
767
jet aircraft
b.
19-inch television sets
c.
Custom built houses
d.
Both a and c
are correct.
Answer
:
d
Difficulty
:
2
Objective
:
1
23.
24.
25.
Terms to Learn
:
process-costing system
Process costing should be used to
assign costs to products when the:
a.
units produced are similar
b.
units produced are
dissimilar
c.
calculation of
unit costs requires the averaging of unit costs
over all units
produced
d.
Either a or c are correct.
Answer
:
d
Difficulty
:
2
Terms to Learn
:
process-costing system
Objective
:
1
Which one of the following statements
is true?
a.
In a job-costing
system, individual jobs use different quantities
of
production resources.
b.
In a process-costing system each unit
uses approximately the same amount
of
resources.
c.
An averaging
process is used to calculate unit costs in a job-
costing
system.
d.
Both a and b are correct.
Answer
:
d
Difficulty
:
2
Terms to Learn
:
process-costing system
Objective
:
1
Answer
:
c
Difficulty
:
2
Objective
:
1
Terms to Learn
:
process-costing system
26.
An example of a business
which would have no beginning or ending inventory
but which could use process costing to
compute unit costs would be a:
a.
clothing manufacturer
b.
corporation
whose sole business activity is processing the
customer
deposits of several banks
c.
manufacturer
of custom houses
d.
manufacturer of large TVs
Conversion costs:
a.
include all the factors of production
b.
include direct materials
c.
in process costing are
usually considered to be added evenly throughout
the production process
d.
Both b and c are correct.
Answer
:
b
Difficulty
:
2
Terms to Learn
:
process-costing system
Objective
:
1