ACCY-Chapter 4

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

Products are homogeneous.

True or false: Process costing is used when a company produces a continuous flow of units that are homogeneous.

True

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

True

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.

Which of the following equations is correct?

Units in beginning WIP + units started or transferred in = Units in ending WIP + units completed and transferred out

A product requires processing in two departments, A and B. Products start in Dept. A. Costs transferred out of Dept. A will be transferred to ______.

Work in Process - Dept. B

Recording the transfer of partially completed products from one processing department to another, requires a journal entry that affects the ______ account of both processing departments.

Work in process

Examples of products that may use operation costing include ______.

clothing shoes jewelry

Process costing accumulates costs by

department

Number of partially completed units x Percentage completion =

equivalent units

Each department has a separate Work in Process account when using ______ costing.

process

The activity in a processing department is performed ______.

uniformly on all units

The journal entry to record the transfer of partially completed products from processing Department #1 to processing Department #2 is to debit Work in Process Department:

#2 and credit Work in Process-Department #1.

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

Costs per equivalent unit are used to value ______.

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

When a customer's order is filled and units are sold, there is a ______ to Finished Goods and a ______ to Cost of Goods Sold.

credit, debit

The journal entry to record material cost in the second department includes a ...................... to Work in Process-Department #2.

debit

The journal entry to record the transfer of completed units to finished goods is .................. Finished Goods and ................... Work in Process.

debit, credit

Operations costing is similar to job-order costing because ______.

each batch is charged for its own specific materials

To report ending inventory, partially completed units are translated into ............. units.

equivalent

Equivalent units of production under the weighted-average method equals:

equivalent units in ending work in process plus units transferred out.

When production is completed in the last processing department, units are transferred to the ................ account.

finished goods

Operations costing is similar to process costing because ______.

labor and overhead costs are accumulated by operation or department

Products such as clothing that are produced in batches but can vary considerably from model to model may use .......... costing.

operation

When products have both similar and individual characteristics, ______ costing is used.

operation

In situations where products have some common characteristics and some individual characteristics, .................. costing is used.

operations

A processing department transferred 2,000 units to the next department. Ending work in process in the department contained 100 units that were 40% complete with regard to materials and 25% complete with regard to conversion costs. Using the weighted-average method, the equivalent units of production for materials is ______.

2,000 + (100 × 40%) = 2,040

If ending work in process contains 300 units that are 40% complete the number of equivalent units is ______.

300 × 40% = 120

The journal entry to record direct labor costs in processing Department #1 is debit ______,

Work in process-Department #1 and credit Salaries and wages payable

In process costing, manufacturing overhead costs are distributed to each department ______.

according to the amount of the allocation base incurred in the department

Direct labor plus manufacturing overhead equals .......... cost.

conversion

Conversion costs are ______.

direct labor plus manufacturing overhead

Industries that convert raw materials into homogeneous products typically use ................ costing.

process

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

When using process costing, materials, labor and overhead may be added in ______ processing department.

any

Similarities between job-order costing and process costing include the ______.

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

In process costing, manufacturing overhead costs are ______.

generally applied using a predetermined overhead rate

In a processing department, all units of output are

identical

The two common methods for determining unit product costs are ______ costing.

job-order and process

The two most commonly used methods for determining unit product costs are .............. costing and .............. costing.

job-order, process

Costs transferred in from Department A to Department B ______.

will always be 100% complete with respect to Department A

When using process costing, each processing department has a separate ............ account.

work in process

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

processing

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

transferred in

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

transferred out

Methods to calculate departmental unit costs include ______.

weighted-average FIFO

A processing department is an organization unit ______.

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

Canners Company uses weighted-average costing. Beginning work in process inventory had $3,650 of material costs. During the period, $5,000 of materials and $9,250 in conversion costs were added. If there are 250 equivalent units of production for materials, the cost per equivalent unit for materials is ______.

($3,650 + $5,000) ÷ 250 = $34.60

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

Costs in beginning work in process inventory was $4,500 and $37,800 in costs were added during the period. If there are 7,050 equivalent units, the cost per equivalent unit under the weighted-average method is $

(4,500+37,800)/7,050= $6

Using the weighted-average method, if work in process inventory has 100 units that are 40% complete and 300 units were transferred to the next department during the period, there are a total of

300+(100x40%) = 340

When ending work in process contains 500 units that are 34% completed, there are .................. equivalent units.

500*34% = 170

FIFO method

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

Weighted-average method

Combines costs and outputs from the current and prior periods.

The entry to record the sale of finished goods to customers is a debit to ______.

Cost of goods sold and a credit to Finished goods

True or false: When using process costing, labor and overhead can be added in any department, but materials can only be added in the first processing department.

False

When using process costing, which of the following can be added in any department?

Materials, labor and overhead

The journal entry to record the transfer of completed units to the finished goods warehouse is to debit ______.

Finished goods and credit Work in process

The journal entry to record direct materials costs in processing Department #1 is debit ______.

Work in Process-Department #1 and credit Raw Materials

The journal entry to apply overhead cost to processing Department #1 is to debit:

Work in process-Department #1 and credit Manufacturing overhead.

Units in ............ work in process inventory + units started or transferred in = Units in ........... work in process inventory + units completed and transferred out.

beginning, ending

The correct journal entry to apply manufacturing costs to processing Department #1 is ................ Manufacturing overhead and ................... Work in process-Department #1.

credit, debit

The journal entry to record labor cost in the first department is ................ Wages payable and ............. Work in process-Department #1.

credit, debit