ACCT 4 Ch. 4 SBLS

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

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

Finished Goods

The step down method begins allocating cost with the department that provides the ___ amount of service to other service departments

Greatest

Combines costs and outputs from the current and prior periods

Weighted-average method

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

Work in process

Process costing produces ___ units A. Specialized B. Homogeneous C. Distinct D. Different types of

B

When using process costing, which of the following can be added in any department? A. Only overhead B. Materials, labor and overhead C. Only materials and overhead D. Only Labor

B

The journal entry to record the transfer of completed units to finished goods would be ___ (debit/credit) Finished Goods and ___ (debit/credit) Work in Process

debit, credit

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

equivalent

LPM Industries has two service departments (Administration and Maintenance) and two operating departments. Departmental costs before allocations are $950,000 for Administration and $1,650,000 for Maintenance. Maintenance costs are allocated on the basis of the number of employees. Administration has 450 employees; Maintenance has 750 employees; Operating Department 1 has 1,350 employees and Operating Department 2 has 1,200 employees. Using the direct method, Maintenance cost allocated to Operating Department 1 is: 1,650,000 x 1,350/(1,350+1,200)= A. 873,529 B. 776,741 C. 594,000 D. 742,500

A

The direct method allocates service department costs A. Directly to operating departments B. Directly to other service departments C. To both operating and other service departments

A

The equivalent units of production computed under the weighted average method does not take into account the percentage completed of the beginning inventory A. True B. False

A

Methods to calculate departmental unit costs include (Check all that apply) A. LIFO B. FIFO C. Weighted Average D. Specific Identification

BC

The two common methods for determining unit product costs are A. Job order costing and activity based costing B. Traditional costing and activity based costing C. Job order costing and process costing D. Process costing and variable costing

C

Each department has a separate Work in Process account when using ___ costing A. Both process and job order B. Process C. Job order

B

The company occupies a building that has 50,000 square feet. Of the total square footage, 5,000 is used by service dept. #1 10,000 is used by Service Dept. #2 and 35,000 is used by the two operating departments. Under the direct method of service department allocation, square footage used in the allocation of Service Dept. #1's costs will be: A. 45,000 B. 50,000 C. 35, 000 D. 40,000

C

Characteristics of operation costing include (Check all that apply) A. Products are homogeneous B. Costs are accumulated by individual unit C. Products are processed in batches D. Costs are accumulated by department

CD

Once production is completed in all processing departments, production costs are transferred to A. Manufacturing Overhead B. Work in Process C. Finished Goods D. Cost of Goods Sold

C

Conversion costs are A. Direct plus raw materials B. Raw materials, direct labor, and manufacturing overhead C. Direct labor plus manufacturing overhead D. Raw materials plus manufacturing overhead

C

In process costing, manufacturing overhead costs are A. Only assigned to the first work in process department B. Not assigned to work in process C. Generally applied using a predetermined overhead rate D. Applied based on actual costs incurred in each department

C

If ending work in process contains 300 units that are 40% complete the number of equivalent units is (Units x %)

120

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

170

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 ___ equivalent units of production. 300 + (100 x 40%)

340

Costs in beginning work in process inventory was $4,500 and $37,800 in costs were added during the period. Under the weighted average method, if there are 7,050 equivalent units, the cost per equivalent unit is $___. (4,500+37,800)/7,050

6

Equivalent units of production under the weighted average method equal ___ A. Equivalent units in ending work in process plus units transferred out B. Units transferred out minus equivalent units in ending work in process C. Units transferred out D. Equivalent units in ending work in process

A

Operations costing is similar to job-order costing because A. Each batch is charged for its own specific materials B. Products are generally produced as individual jobs C. Labor and overhead costs are accumulated by job

A

Operations costing is similar to process costing because A. Labor and overhead costs are accumulated by operation or department B. Products are generally produced in large, homogeneous quantities C. Material costs are accumulated by batch

A

Companies allocate service department costs to operating departments to (Check all that apply) A. Motivate managers B. Evaluate managerial performance C. Discourage use of service departments

AB

Industries/products more suitable for process costing that job order costing include (Check all that apply) A. Flour B. Paper Towels C. Sunscreen D. Shipbuilding

ABC

Products most likely to use a process costing system include (Check all that apply) A. Toothpaste B. Gasoline C. Flour D. Custom Furniture

ABC

Example of a service department includes (Check all that apply) A. Human Resources B. Cafeteria C. Marketing & Advertising D. Internal Auditing

ABD

equivalent units of production under the weighted-average method equal ___ A. Units transferred out minus equivalent units in ending work in process B. Units transferred out C. Equivalent units in ending work in process D. Equivalent units in ending work in process plus units transferred out

D

LPM Industries has two service departments (Administration and Maintenance) and two operating departments. Departmental costs before allocations are $950,000 for Administration and $1,650,000 for Maintenance. Maintenance costs are allocated on the basis of the number of employees. Administration has 450 employees; Maintenance has 750 employees; Operating Department 1 has 1,350 employees and Operating Department 2 has 1,200 employees. Using the step-down method, how much of the cost from the Maintenance Department will be allocated to Operating Department 2? A. $528,000 B. $776,471 C. $660,000 D. $742,500 1,650,000 x 1,200/(450+1,350+1,200)=

C

When many different jobs or products are worked on each period, the most likely costing system used is A. Quality B. Process C. Job-order

C

Th journal entry to record labor cost in the first department would be to ___ debit/credit wage payable and ___ debit/credit work in process department #1

Credit, Debit

When a customer's order is filled and units are sold, there is a ___ to Finished Goods and a ___ to COGS

Credit, debit

The central purposes of an organization are carried out in the ___ department

Operating

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

Processing

Purchasing is an example of a(n) ___ department

Service

Service department costs are allocated to both operating departments and some, but not all, service departments when using the ___ method

Step-down

Direct labor plus manufacturing overhead equals ___ cost

conversion

The correct journal entry to apply manufacturing costs to processing Department #1 would be to ___ (debit/credit) Manufacturing overhead and ___ (debit/credit) Work in process- Department #1.

credit, debit

Services provided between service departments are known as ___ services

interdepartmental

LPM Industries has two service departments (Administration and Maintenance) and two operating departments. Departmental costs before allocations are $950,000 for Administration and $1,650,000 for Maintenance. Maintenance costs are allocated on the basis of the number of employees. Administration has 450 employees; Maintenance has 750 employees; Operating Department 1 has 1,350 employees and Operating Department 2 has 1,200 employees. Using the step-down method, how much of the cost from the Maintenance Department will be allocated to Administration? A. 247,500 B. 0 C. 198,000 1,650,000 x 450/(450+1,350+1,200)=

A

Process Costing is used when a company produces a continuous flow of units that are homogeneous A. True B. False

A

Interdepartmental services are services provided A. To customers B. To employees C. By operating departments D. Between service departments

D

The difference in the treatment of costs transferred in from department a to department b when compared to materials and conversion costs is that costs transferred in A. From department a must be 50% complete B. From department a do not differ from the material and conversion categories C. Will not complete with respect to work done in department A D. Will always be 100% complete with respect to department A

D

The journal entry to record material cost in the second department would include ___ debit/credit to work in process department #2

Debit

number of partially completed units x percentage completion=___ ___

Equivalent units

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

FIFO Method

In a processing department all units of output are ___?

Homogenous

When using process costing, materials can be added ___ processing department A. In any B. Only in the last C. Only in the first

A

Differences between job-order and process costing include that process costing: (Check all that apply) A. Accumulates costs by department B. Assigns materials, labor and overhead costs to specific customer orders C. Computes unit costs by job D. Is used for indistinguishable products

AD

A process department is an organization unit A. Where work is performed on a product and overhead is added to complete the units B. Where work is performed on a product, and materials, labor and overhead are added C. That processes units into the finished goods D. Where materials and labor are combined to be processed

B

LPM Industries has two service departments (Administration and Maintenance) and two operating departments. Departmental costs before allocations are $950,000 for Administration and $1,650,000 for Maintenance. Maintenance costs are allocated on the basis of the number of employees. Administration has 450 employees; Maintenance has 750 employees; Operating Department 1 has 1,350 employees and Operating Department 2 has 1,200 employees. Using the direct method, the cost allocated from Maintenance to Administration is: A. 247,500 B. 0 C. 198,000

B

Recording the transfer of partially completed products from one processing department to another, requires a journal entry that affect the ___ account of both processing departments A. Manufacturing Overhead B. Work In Process C. Finished Goods D. Raw Materials

B

The direct method allocates service department costs: A. To both operating and other service departments B. Directly to operating departments C. Directly to other service departments

B

The equivalent units completed are valued the same as units ___ for purposes of determining the cost per unit A. In work in process B. Transferred out C. Partially completed D. Transferred in

B

The two types of departments in large organizations are A. Operating and production B. Operating and service C. Service and maintenance

B

When computing the equivalent units of production under the weighted-average method, partially completed ___ inventory is ignored A. Ending work in process B. Beginning work in process C. Ending finished goods D. Beginning finished goods

B

When using process costing, labor and overhead can be added in any department, but materials can only be added in the first processing department A. True B. False

B

When using the step-down method, after a service department's costs have been allocated A. Any remaining costs are not allocated B. Costs of other service departments are not reallocated back to it C. Other service department costs are be reallocated back to it

B

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 method that provides for allocation of a service departments's costs to other service departments, as well as to operating departments, in a sequential manner is referred to as the ___ method A. Step-down B. Direct C. FIFO D. Reciprocal

A

Examples of operating departments include (Check all that apply) A. Production department at a manufacturer B. Custodial department at a service firm C. Geography department at a university D. Surgery department at a hospital

ACD

Examples of products that may use operation costing include (Check all that apply) A. Clothing B. Flour C. Shoes D. Jewelry

ACD

Similarities between job order costing and process costing include the (Check all that apply) A. Manufacturing accounts used B. Way in which unit costs are calculated C. Flow of costs through the manufacturing accounts D. Basic purpose to assign and compute product costs

ACD

A processing department produces ___ units (Check all that apply) A. Homogeneous B. Unique C. Heterogeneous D. Identical

AD

Characteristics of operation costing include (Check all that apply) A. Costs are accumulated by department B. Costs are accumulated by individual unit C. Products are homogeneous D. Products are processed in batches

AD

The ___ method of allocating service department costs ignores services provided by one service department to other service departments A. Reciprocal B. Direct C. Step-down

B

The entry to record the sale of finished foods to customers is a debit to A. Work in process and a credit to finished goods B. Finished goods and a credit to cost of goods sold C. Work in process and a credit to cost of goods sold D. Cost of goods sold and a credit to finished goods

D

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 A. #2 and credit finished goods B. #1 and credit finished goods C. #1 and credit work in process- department #2 D. #2 and credit work in process- department #1

D

When unit costs are transferred from Department A to Department B, Department B will treat the costs as A. A unit B. Work in Process C. Production D. Transferred in

D