Cost Accounting Chapter 17 Terms

Which of the following statements is​ true? A. In a​ job-costing system, average production cost is calculated for all units produced. B. In a​ process-costing system, each unit uses approximately the same amount of resources. C. In a​ job-costing system, overheads are allocated to all units equally. D. In a​ process-costing system, individual jobs use different quantities of production resources.

B.

​Weighted-average cost per equivalent unit is obtained by dividing the sum of costs for beginning work in process plus costs for work done in the current period by total equivalent units of work done to date. true false

true

to find how many units are used that you started with...

take the started units - the ending inventory

Estimating the degree of completion for the calculation of equivalent units is usually easier for conversion costs than it is for direct materials. true false

false

In a period of falling​ prices, the lower cost of goods sold under the FIFO method leads to higher operating income and higher tax payments. true false

false

In a period of rising​ prices, the​ weighted-average method will result in higher tax payments. true false

false

Underestimating the degree of completion of ending work in process leads to increase in operating income true false

false

Equivalent units is a derived measure of output calculated by converting the quantity of inputs into the amount of completed output that could be produced with that quantity of input. true false

true

If manufacturing labor costs are added to the process at a different time compared to other conversion​ costs, an additional cost category—direct manufacturing labor costs—would be needed to assign these costs to products. true false

true

Rework is finished production that is NOT in accordance with customer desires. The product is redone and sold as finished goods. true false

true

The cost of units completed can differ materially between the weighted average and the FIFO methods of process costing. true false

true

The​ weighted-average process costing method does not distinguish between units started in the previous period but completed during the current period and units started and completed during the current period. true false

true

Under the FIFO method of​ process-costing, costs incurred and units produced in the current period are used to calculate the cost per equivalent unit of work in the current period in contrast the​ weighted-average method which merges the units and costs of the previous period with that of the current period. true false

true

How do you find the total WIP account amount debited for a period?

It is the total costs ADDED in the period.

Which of the following best describes​ scrap? A. units of production whether fully or partially​ completed, that do not meet the specifications required by customers for good units and are discarded or sold at reduced prices B. products of a joint production process that have low total sales values relative to the total sales value of the main product C. units of production that do not meet the specifications required by customers but that are subsequently repaired and sold as good finished units D. residual material that results from manufacturing a product

D.

Which of the following steps are part of the​ first-in, first-out​ (FIFO) process-costing​ method? A. assumes as part of its first step that the most recently worked on units are completed and transferred out first B. assumes as part of its first step that there is no beginning​ work-in-process C. assignment of costs of the current​ period's equivalent units to the first units completed and transferred out of the process D. assignment of costs of the previous​ period's equivalent units in beginning​ work-in-process inventory to the first units completed and transferred out of the process

D.

Under the​ weighted-average method, how would you calculate the cost per equivalent units with regards to conversion​ costs? A. ​(total direct labor costs in beginning work in process​ + conversion cost for work done in the current​ period)/(units completed and transferred out during the period​ + equivalent units in ending​ inventory) B. conversion costs for work done in the current​ period/units completed and transferred out in the current period C. ​(total conversion costs in beginning work in process​ + conversion cost for work done in the current​ period)/(units completed and transferred out during the period​ + equivalent units in ending​ inventory) D. ​(total conversion costs in beginning work in​ process)/(units completed and transferred out during the period​ + equivalent units in ending​ inventory)

C.

Which of the following describes rework​? A. units of production whether fully or partially​ completed, that do not meet the specifications required by customers for good units and are discarded or sold at reduced prices B. residual material that results from manufacturing a product C. units of production that do not meet the specifications required by customers but that are subsequently repaired and sold as good finished units D. products of a joint production process that have low total sales values relative to the total sales value of the main product

C.

Which of the following is an example of​ spoilage? A. short lengths from woodworking operations that cannot be used to make another product B. edges from plastic molding operations that result from the main​ product's manufacturing process but have little or no value C. defective units of laptops detected after the production process but reworked before the units are sold as good products to customers D. defective​ men's button down cotton collar dress shirts that have small pulls in the material and must be sold as discounted​ "seconds" in the factory store

B.

Which of the following is true of​ weighted-average process-costing? A. It does not represent the average cost of units when inputs prices fluctuates markedly from month to month. B. It calculates the cost per equivalent unit of all work done to​ date, regardless of the accounting period in which it was done. C. It arrives at the same unit costs as arrived under FIFO​ method, but the computations are easier under​ weighted-average process-costing. D. It facilitates​ period-to-period comparisons and hence is very useful in analyzing the performances of managers for different periods.

B.

​Transferred-in costs are treated as if they​ are: A. direct labor costs added at the beginning of the process B. a separate direct material added at the beginning of the process C. conversion costs added at the beginning of the process D. costs of beginning inventory added at the beginning of the process

B.