Managerial accounting prechapter 5 questions

Characteristics of operation costing include

-products are processed in batches -costs are accumulated by department

Industries/products more suitable for process costing than job-order costing include

-sunscreen -flour -paper towels

The equivalent units completed are valued the same as units_______for purposes of determining the cost per unit.

Transferred out

True or false: A cost reconciliation report using the weighted-average method reports the same information as a cost reconciliation report using FIFO.

True

True or false: a processing department needs to calculate a separate unit cost for each type of cost incurred.

True

True or false: the flow of costs through manufacturing accounts is basically the same for job-order costing and process costing.

True

Weighted Average Method

combines costs and outputs from the current and prior periods

Conversion costs are

direct labor and manufacturing overhead

Similarities between job-order costing and process costing include the

-manufacturing accounts used -basic purpose to assign and compute product costs -flow of costs through the manufacturing accounts

number of partially completed units x percentage completion

equivalent units

Equivalent units of production under the weighted-average method equal

equivalent units in ending work in process plus units transferred out

The journal entry to record direct materials costs in processing department #1 is debit

Work in Process-Department #1 and credit Raw Materials

If there are no beginning or ending inventories, then the FIFO and weighted-average methods will produce identical results because unit costs———-.

Will be based on just the current period's costs

Under FIFO method, the cost of units transferred out consists of the cost____.

in beginning work in process inventory to complete beginning work in process inventory of units started and completed during the period

Franklin, Inc had costs in beginning work in process inventory of $4,730. During the period a total of $12,900 costs were added. Franklin uses FIFO costing and had 860 equivalent units. The cost per equivalent unit is_______.

$15.00 ($12,900/860)

Costs in beginning work in process inventory totaled $1,200 and $6,000 in costs were added during the period. If there are 75 equivalent units, the cost per equivalent unit using FIFO is

$80 ($6000/75)

The formula for the cost per equivalent unit using the weighted-average method is

(Cost of beginning work in process inventory + Cost added during the period) ÷ Equivalent units of production

FIFO method

Bases costs solely on the costs and outputs from the current period

To calculate cost per equivalent unit using the weighted-average method, add the cost of_______work in process inventory to costs added during the period and divide by equivalent units of production.

Beginning

Which of the following costs is included in the numbers for of the weighted-average method's computation of cost per equivalent unit, but excluded when FIFO is used?

Beginning work in process inventory

Which of the following costs is included in the numerator of the weighted-average method's computation of cost per equivalent unit, but excluded when FIFO is used?

Beginning work in process inventory

In both the FIFO and weighted-average methods, costs to be accounted for include______work in process inventory, while costs accounted for include______work in process inventory.

Beginning; ending

When compared with weighted-average costing, the FIFO method is________complex

Both more accurate and more

Cost per equivalent unit are used to value

Both units in ending inventory and units transferred to the next department

The journal entry to record material cost in the second department includes a___________(debit/credit) to Work in Process-department #2.

Debit

Process costing accumulates costs by______.

Department

When computing equivalent units, FIFO and weighted-average treat_______the same.

Ending inventory

To report ending inventory, partially completed units are translated into_______units

Equivalent

Which of the following is included in computing equivalent units under the FIFO method, but not under the weighted-average method?

Equivalent units to complete beginning work in process

The method of process costing that is generally considered to be the most accurate, but also the most complex is________.

FIFO

Process costing procedures________units

Homogeneous

The FIFO and weighted-average methods will produce identical results if they are_______ending inventories.

Never any

Each department has a separate Work in Process account when using______costing

Process

Work is performed on products, and materials, labor, or overhead costs are added to products in a(n)_______department

Processing

Which of the following is not a characteristic of operation costing?

Products are homogeneous.

Equivalent units of production equals the number of units transferred to the next department (or finished goods) plus equivalent units in ending work in process under which method(s) of costing?

Weighted-average only

If there are no beginning or ending inventories, then the FIFO and weighted-average methods will produce identical results because unit costs

Will be based on just the current period's cost

When unit costs are transferred from Department A to Department B, Department B will treat the costs as ______.

transferred in

Methods to calculate departmental unit costs include

weighted average and FIFO

A processing department is an organization unit ______.

where work is performed on a product, and materials, labor and overhead are added

Costs transferred in from Department A to Department B ______.

will always be 100% complete with respect to Department A

When using process costing, a separate ______ account is maintained for each processing department.

work in process

when using process costing, each processing department has a separate ___ ____ ___ account

work in process

Which of the following is a key difference between process and job-order costing?

Under process costing, it makes no sense to try to identify materials, labor and overhead costs with a particular customer order.