ACCT 212 CH.3

Which of the following is most likely to use a process costing system?

A company that makes one style office chair

Equivalent Unit

A measure used to convert partially completed units into the equivalent of a full unit. Units in Ending Inventory X % of Completion

Manufacturing Costs

Are accumulated by process rather than by job.

Non-manufacturing Goods

Are expenses during the period incurred rather than being counted as part of the cost of the product.

Cost per Equivalent Unit

Beginning Inventory + Current Cost / Equivalent Units

When calculating equivalent unit cost using the weighted average method , which of the following amounts are combined?

Beginning WIP and current period costs.

WIP includes:

DM, DL, and MOH

Process costing is most likely to be used to calculate cost for which of the following products?

Golf Balls

Manufacturing Overhead

Includes all costs other than direct materials and direct labor that are incurred to manufacture a physical product.

Which of the following statements about process costing is false?

Process costing keeps a separate record, or cost sheet, for each unit produced.

Transferred-in Cost

Represents the manufacturing cost that is transferred from one production process to another.

Which of the following costs would not flow through the WIP inventory account:

Sales commissions

Weighted-Average Method

Simpler and more commonly used in the real world. Averages the cost of the units in beginning inventory and the cost of the units that were started during the current period.

Cost of goods manufactured or cost of goods completed

The cost transferred from WIP inventory into finished goods inventory.

Production Report

The foundation of a process costing system. This report provides info about the number of units and manufacturing cost that flow through a production process during an accounting period. It is also used to determine how much manufacturing cost to transfer out of WIP Inventory and into the next processing department and to value any units that are in process at the end of the accounting period.

Direct Labor

The hands-on labor that can be directly and conveniently traced to the product.

Direct Materials

The major material inputs that can be directly and conveniently traced to the product.

Units Started and Completed

Units started or Completed-units in beginning or ending inventory.

Cost of Goods Sold

When a product is sold, the manufacturing costs are transferred here where they are matched against sales revenue on the income statement.

Conversion Cost

When you combine direct labor and manufacturing overhead costs together in a single category. =DL+MOH

The primary difference between FIFO and weighted average methods of process costing has to do with the treatment of

beginning inventory