08-06

D

A process costing system was used for a department that began operations in January. Approximately the same number of physical units, at the same degree of completion, were in work in process at the end of both January and February. Monthly conversion costs are allocated between ending work in process and units completed. Compared to the FIFO method, would the weighted average method use the same or a greater number of equivalent units to calculate the monthly allocations? a) Equivalent units for weighted average compared to FIFO- January: Greater number Equivalent units for weighted average compared to FIFO- February: Greater number b) Equivalent units for weighted average compared to FIFO- January: Same Equivalent units for weighted average compared to FIFO- February: Same c) Equivalent units for weighted average compared to FIFO- January: Greater number Equivalent units for weighted average compared to FIFO- February: Same d) Equivalent units for weighted average compared to FIFO- January: Same Equivalent units for weighted average compared to FIFO- February: Greater number

A

A process costing system: A. uses a separate Work-in-process account for each processing department. B. uses a single Work-in-process account for the entire company. C. uses a separate Work-in-process account for each type of product produced. D. does not use a Work-in-process account in any form.

B

Additional materials are added in the second department of a four-department production process. However, this addition does not increase the number of units being produced in the second department, but will: A. increase the equivalent units of production. B. increase the total cost per unit. C. decrease the value of the transferred-in costs. D. decrease the total costs to account for.

A

In a production cost report using process costing, transferred-in costs are most similar to: A. material added at the beginning of the process. B. conversion costs added during the process. C. costs transferred-out to the next process. D. costs included in beginning inventory.

True

In general, weighted-average costing is simpler to use while first-in, first-out (FIFO) costing provides greater decision-making benefits to managers.

True

The more prices change, the greater the difference between the costs assigned to units transferred out using weighted-average costing and the costs assigned to units transferred out using first-in, first-out (FIFO).

True

The degree of completion associated with prior department costs is always 100%.

B

Under which of the following conditions will the FIFO method produce the same cost of goods manufactured as the weighted-average method? A. There is no ending inventory. B. There is no beginning inventory. C. The beginning and ending inventories are equal. D. The beginning and ending inventories are both 50% complete.

A

Which of the following statements is(are) true? I. For cost control, the FIFO method of process costing is better than the weighted-average method. II. The weighted-average method of process costing assigns more cost to units completed (transferred out) than the FIFO method. A. Only I is true. B. Only II is true. C. Both I and II are true. D. Neither I nor II is true.