Managerial Accounting Chapter 4 Test 1 Raymond Besser

How to find equivalent units

(Completed and Transferred Out) (WIP Ending X Ending WIP Percentage )

Ending WIP Inventory

(Ending WIP)X(Cost per Unit)= Ending WIP Inventory Materials WIP Inventory+Conversion WIP Inventory = Total Ending WIP Inventory

The Assembly Department started the month with 35,000 units in its beginning work in process inventory. An additional 472,000 units were transferred in from the prior department during the month to begin processing in the Assembly Department. There were 34,000 units in the ending work in process inventory of the Assembly Department. How many units were transferred to the next processing department during the month? A. 507,000 B. 473,000 C. 471,000 D. 541,000

B. 473,000 Units completed and transferred out = Units in beginning work in process inventory + Units started into production or transferred in - Units in ending work in process inventory Units completed and transferred out = 35,000 + 472,000 - 34,000 = 473,000

How to find Cost per equivalent unit

Begin WIP+ Cost Added=Total Cost Total Cost/ Equivalent Units= Cost per equivalent unit

24. Which of the following companies would be most likely to use a process costing system? A. Ship builder. B. Movie studio. C. Oil refinery. D. Hospital.

C. Oil refinery.

Which of the following companies would be most likely to use a process costing system? A. a shipbuilder B. a furniture manufacturer C. a law firm D. a utility producing natural gas

D. a utility producing natural gas

In calculating cost per equivalent unit under the weighted-average method, prior period costs are not combined with current period costs.

False

Process costing is used in those situations where many different products or services are produced each period to customer specifications.

False

The "costs accounted for" portion of the cost reconciliation report includes the cost of beginning work in process inventory and the cost of units transferred out.

False

The "costs accounted for" portion of the cost reconciliation report includes the cost of beginning work in process inventory and the costs added to production during the period.

False

The "costs to be accounted for" portion of the cost reconciliation report includes the cost of ending work in process inventory and the costs added during the period.

False

The units in beginning work in process inventory plus the units in ending work in process inventory must equal the units transferred out of the department plus the units started into production.

False

Under the weighted-average method, the equivalent units used to compute the unit costs of ending inventories relate only to work done during the current period.

False

Total cost of units transferred

Total Transferred out X cost per unit Add Materials and Conversion Total together= Total cost of the transferred out inventory

A job-order cost system would be used to account for the cost of building an oil tanker

True

Both job-order and process costing systems use averaging to compute unit product costs.

True

Costs are accumulated by department in a process costing system.

True

The "costs to be accounted for" portion of the cost reconciliation report includes the cost of beginning work in process inventory and the costs added during the period.

True

Under the weighted-average method of process costing, costs from the prior period are averaged with those of the current period in computing unit costs.

True

Using process costing, it is necessary to consider the stage of completion of the units when assigning conversion cost to partially completed units in the ending work in process inventory

True

When materials are purchased in a process costing system, a materials account is debited with the cost of the materials

True

For which situation(s) below would an organization be more likely to use a process costing system of rather than a job-order costing system? A. a paper mill that processes wood pulp into large rolls of paper B. a shop that restores old cars to "showroom" quality C. a framing shop that builds picture frames to order for individual customers D. a masonry company that builds brick walls, bulkheads, and walkways designed by architects

A. a paper mill that processes wood pulp into large rolls of paper

When the weighted-average method of process costing is used, a department's equivalent units are computed by: A. subtracting the equivalent units in beginning inventory from the equivalent units in ending inventory. B. subtracting the equivalent units in beginning inventory from the equivalent units for work performed during the period. C. adding the units transferred out to the equivalent units in ending inventory. D. subtracting the equivalent units in beginning inventory from the sum of the units transferred out and the equivalent units in ending inventory.

C. adding the units transferred out to the equivalent units in ending inventory.

Which of the following statements about a process costing system is incorrect? A. In a process costing system, each processing department has a work in process account. B. In a process costing system, equivalent units are separately computed for materials and for conversion costs. C. In a process costing system, overhead can be underapplied or overapplied just as in job-order costing. D. In a process costing system, materials costs are traced to units of products.

D. In a process costing system, materials costs are traced to units of products.

In order to equitably allocate costs in a process costing system, dissimilar products are restated in terms of equivalent units by weighting the number of units produced by their market values.

False

Pulo Corporation uses a weighted-average process costing system. The company has two processing departments. Production starts in the Assembly Department and is completed in the Finishing Department. The units completed and transferred out of the Assembly department during April will become the: A. units in April's ending work in process in Finishing. B. units in May's beginning work in process in Finishing. C. units started in production in Finishing for April. D. units started in production in Finishing for May.

C. units started in production in Finishing for April.

Barraza Corporation uses a weighted-average process costing system. Barraza has two direct materials. One of these materials is added at the beginning of the production process. The other material is added when processing is 50% complete. When will the equivalent units of production for these two materials be equal? A. when processing on beginning work in process is less than 50% complete at the start of the period. B. when processing on beginning work in process is more than 50% complete at the start of the period. C. when processing on ending work in process is over 50% complete. D. when processing on ending work in process is less than 50% complete.

C. when processing on ending work in process is over 50% complete.

The following journal entry would be made in a processing costing system when units that have been completed with respect to the work done in Processing Department Z are transferred from Processing Department Z to Processing Department Y: Work in Process, Department Z XXX Work in Process, Department Y XXX

False