Accounting Test 1: Concept Videos Chapter 4

Which of the following statements about processing costing is false?

Process costing is used when a company produces a continuous flow of units that are distinguishable from one another.

Sneaker Styles Company manufactures a wide variety of sneakers. Which of the following systems is most suitable for Sneaker Styles?

Operation Costing is most suitable for Sneaker Styles as its products have some common characteristics and some individual characteristics.

Debit and Credit for: Finished bricks that cost $100,000 were sold to customers.

Debit: COGS Credit: Finished Goods

Debit and Credit for: Finished snowboards worth $80,000 were transferred from the Shaping Department to the finished goods warehouse.

Debit: Finished Goods Credit: WIP—Shaping

Debit and Credit for: Raw materials worth $12,000 were issued for use in the Cutting Department.

Debit: WIP- Cutting Credit: Raw Materials

Debit and Credit for: Manufacturing overhead was applied to the Shaping Department, $10,000.

Debit: WIP—Shaping Credit: MOH

Debit and Credit for: Unshaped, cut snowboards worth $60,000 were transferred from the Cutting Department to the Shaping Department.

Debit: WIP—Shaping Credit: WIP—Cutting

Equivalent units is computed using which of the following formulas?

Equivalent units = Number of partially completed units x Percentage completion

The cost of beginning work in process inventory plus the costs added to production during the period equals the _______.

total cost to be accounted for

Which of the following statements about companies that use processing costing is FALSE? A. A processing department is an organizational unit where work is performed on a product and where materials, labor, or overhead costs are added to the product. B. Costs are accumulated by department. C. Raw material costs are added only to the first processing department. D. A separate Work in Process account is maintained for each processing department.

C. Raw material costs are added only to the first processing department.

A company has three processing departments: Mixing, Baking, and Packaging. The Baking Department transfers 500 units to the Packaging Department. How will the Packaging Department account for the costs of those 500 units?

Costs transferred in

Conversion cost is composed of _______.

direct labor and manufacturing overhead