Chapter 3 Quiz questions
Under a process costing system, product costs are accumulated with respect to jobs completed.
false
Under the first-in, first-out (FIFO) method, the current period equivalent units of production for transferred in units in beginning inventory are zero because ________.
no additional costs for these units were incurred in the current period
Costs are accumulated by ________ in a process cost system.
process
In a process costing system, a department's total production costs incurred in a particular period must equal the total costs transferred out of the department.
false
In a production cost report, the number of units to account for must always be greater than the number of units accounted for.
false
In process costing, equivalent units of production for transferred in are usually 100%.
false
In the weighted−average method for the production cost report, the units in beginning work−in−process are not considered as part of units accounted for in the production cost report.
false
Production cost reports prepared using the first-in, first-out (FIFO) method assume that the first units started in the production process are the last units completed and sold.
false
The combined production costs from all departments for completed products are transferred to the Cost of Goods Sold account immediately after the completion of all production processes.
false
The number of equivalent units for direct materials and conversion costs must always be equal.
false
The weighted average method determines the cost of equivalent units of production by accounting for beginning inventory costs separately from current period costs.
false
The weighted average method determines the number of equivalent units of production by accounting for completed and transferred out units plus percentage completed of ending work in process units.
false
There were 20,000 units completed and transferred out and 5,000 units that are 20% completed for conversion costs. All materials costs are added at the beginning of production. Using the weighted average method, the total equivalent units of production accounted for is 21,000 units for direct materials.
false
Under process costing, a single WorkinProcess Inventory account is maintained for all processes, with a subsidiary ledger containing individual production cost reports for each process.
false
Under process costing, the unit cost of the completed units is less than the unit cost of the incomplete units.
false
Under the first-in, first-out (FIFO) method, the current period equivalent units of production for the units in the beginning inventory are always 100% complete.
false
In process costing, when the production costs have to be split between completed and in process units, we cannot just divide the total cost by the number of units started to determine the unit cost because ____________________.
some units are not completed
A process is one of a series of steps in manufacturing, usually associated with making large quantities of similar items.
true
A production cost report can help managers identify the most profitable products.
true
A production cost report cannot be used for the pricing of products because it depicts only the ways to control product costs.
true
A production cost report helps managers identify the costs that can be reduced in the production process.
true
At the end of an accounting period, the costs assigned to a production department can be split into the cost of units fully completed and transferred out, and the cost of units partially completed and remaining in the WorkinProcess Inventory of that department.
true
Both job order costing and process costing track the product costs of direct materials, direct labor, and manufacturing overhead through three inventory accounts on the balance sheet.
true
Cost amounts that are transferred out of one department become the transferred in cost for the next department.
true
In a process costing system, costs can be controlled with the aid of a production cost report.
true
In a process costing system, each process or department has its own WorkinProcess Inventory account.
true
In a process costing system, equivalent units of production must be calculated separately for materials and conversion costs.
true
In most organizations, managers are often rewarded based on how well they meet the budget.
true
In process costing, costs that were incurred in a previous process and brought into a later process as part of the product's cost are transferred in costs.
true
The cost per equivalent unit for transferred in units is calculated by dividing total transferred in costs by the equivalent units of production for transferred in units.
true
The equivalent units of production for transferred in units are always 100%.
true
The last step on the production cost report when using the weighted average method is to determine where the total costs to be accounted for should be assigned.
true
The task of summarizing the flow of physical units is one of the four steps involved in the preparation of the production cost report.
true
There were 20,000 units completed and transferred out and 5,000 units that are 20% completed for conversion costs. All materials costs are added at the beginning of production. Using the weighted average method, the total equivalent units of production accounted for is 21,000 units for conversion costs.
true
Under a process costing system, costs of completed products are transferred to the Finished Goods Inventory at the end of the accounting period.
true
Under process costing, direct materials and direct labor are assigned to WorkinProcess Inventory for each process that uses them.
true
Under process costing, the costs incurred by each department are reported in a separate production cost report for each department.
true
Under the first-in, first-out (FIFO) method, prior period costs are not merged with current period costs.
true
When preparing a production cost report, the weighted average method merges costs from the prior period with the current costs.
true
In a production cost report prepared under the FIFO method, equivalent units of production are NOT computed for ________.
units started and completed in the current period
Howard Company has the following information for the current period for the Welding Department: Costs of beginning work−in−process: Direct materials $38,000 Conversion costs 29,000 Costs added during the period: Direct materials 270,200 Conversion costs 95,900 Equivalent units of production for: Direct materials 15,400 units Conversion 9,600 units Using the weighted−average method, what is the cost per equivalent unit for materials?
$20.01
Alchemy Manufacturing produces a pesticide chemical and uses process costing. There are three processing departments—Mixing, Refining, and Packaging. On January 1, the first department—Mixing—had no beginning inventory. During January, 46,000 fl. oz. of chemicals were started in production. Of these, 30,000 fl. oz. were completed and 16,000 fl. oz. remained in process. In the Mixing Department, all direct materials are added at the beginning of the production process, and conversion costs are applied evenly throughout the process. The weighted−average method is used. At the end of the month, Alchemy calculated equivalent units of production. The ending inventory in the Mixing Department was 70% complete with respect to conversion costs. With respect to direct materials, what is the number of equivalent units of production in the ending inventory?
16000
During August, the Filtering Department of Speedwell, Inc. had a beginning Work−in−Process Inventory balance of 150 units with costs of $50,000. During the month, it started and completed 260 units. It had 30 units in the ending Work−in−Process Inventory. What is the number of equivalent units of production for transferred in units in the Filtering Department in August under the first−in, first−out (FIFO) method?
290
Conversion costs include the costs of purchasing and converting raw materials into finished products.
false
On September 30, the Sorting Department of Java Works had ending Work-in-Process Inventory of 30,000 units that was 47 % complete for materials and 35 % complete for conversion costs. The company uses the FIFO method. This means that for the beginning Work-in-Process Inventory, ________% of the materials and ________% of conversion costs were added during October.
53:65
The Refining Department of Kristian, Inc. had 80,000 pounds of materials to account for in the current month. Of the 80,000 pounds, 66,000 pounds were completed and transferred to finished goods, and the remaining 14,000 pounds were 80% complete. The materials required for production are added at the beginning of the process. Conversion costs are added evenly throughout the refining process. The weighted average method is used. Calculate the total equivalent units of production for direct materials.
80,000
Conversion costs include ________.
direct labor and manufacturing overhead costs
A process costing system is most suitable for businesses that manufacture batches of unique products or provide specialized services.
false
A production cost report shows only the calculations for the physical flow of products.
false
When calculating the cost per equivalent unit in process costing, what is the difference between the weighted average and FIFO methods?
With FIFO, prior period costs are not combined with current period costs.