Ch. 17 Process Costing

An error was made in the computation of the percentage of completion in the current year's ending work in process. The error resulted in assigning a higher percentage of completion to each component of the inventory that actually was the case. Consequently, the following were misstated: 1. the computation of equivalent units 2. the computation of cost per equivalent units 3. costs assigned to COGS completed during the period What were the effects of the error?

1. Overstated 2. Understated 3. Understated

Which of the following would use a process costing system?

19 inch television

Which of the followings statements is FALSE? A. from the standpoint of cost control, weighted average is superior to FIFO because it controls all costs in work in process and not just current costs B. the major difference between FIFO and weighted average is probably traceable to raw materials price flux C. The major difference between weighted average and FIFO is the treatment of beginning inventory costs D. From then standpoint of cost control, FIFO is superior to weighted average because it directs current period cots to current production

A

in the computation of the cost per equivalent unit, the weighted average method of process costing considers, all the costs:

entering work in process from the units in beginning inventory plus the costs for the work completed during the current accounting period

The units transferred in from the first department to the second department should be included in the computation of the equivalent units for the second department under which of the following methods of process costing

fifo and weighted average

Conversion Costs:

in process costing are usually assumed to be added evenly throughout the process

Assuming no BWIp and that EWIP is 50% complete as to conversion costs, the number of equivalent units as to conversion costs would be

less than the units placed in process

EUP are used in process accounting to

provide a means of assigning cost to partially completed units

An equivalent unit of direct materials or conversion cost is equal to

the amount of direct materials or conversion cost necessary to complete one unit of production

The weighted average process costing method calculates equivalent units by

the units completed in the current period plus the equivalent units in ending inventory

A valid reason for using predetermined overhead rates for process costing is

the unrepresentative unit cost that will otherwise result when total factory overhead fluctuates significantly from period to period

Which of the following characteristics applies to process costing but not to job-order

Equivalent units of production

In comparing the FIFO and weighted average methods for calculating EUP

FIFO is better for judging the performance in a period independently from performance in preceding periods

A major advantage of FIFO is:

FIFO provides managers with information about changes in the cost per unit from one period to the next

In a given process costing system, the EUP are computed using the weighted-average method. With respect to conversion costs, the percentage of completion for the current period only is included in the calculation of BWIP EWIP

No and Yes

On occasion weighted average and FIFO methods of process costing will result in the same dollar amount of costs being transferred to the next department. What would cause that?

No beginning inventory

In a process costing system, the application of factory overhead usually is recorded as an increase in

WIP C.

Transferred in costs are treated as if they are:

a separate direct material added at the beginning of the process

The purpose of calculating equivalent units is to

convert partially completed units into the amount of completed output units that could be made with that quantity of input

What are transferred in costs in a process costing system?

costs of the output of a previous internal process that is subsequently used in succeeding internal process

A true process costing system could make use of each of the following except: A. Standard costs B. Individual lots C. VC D. Responsibility accounting

B

EUP analysis is usually applied to

DM and Conversion costs

A corporation manufacturers two brands of barbed wire fencing for sale to wholesalers and large ranchers. Which of the following would be the best type of costing system for such a company to use?

Process

Why are transferred in costs differentiated from direct materials?

They usually consist of the basic units being produced

The distinct feature of the FIFO process costing method is that the:

work done on beginning inventory before the current period is kept separate from the work done during the current period in the calculation of equivalent units