Managerial Accounting Chapter 18 Quiz 1

Both process costing and job order costing maintain perpetual inventory accounts with subsidiary ledgers.

T

Costs of ending work in process inventory are included in the cost per equivalent unit computation.

T

Equivalent units of production are the number of units that could have been manufactured from start to finish during an accounting period.

T

Equivalent units should be computed separately for direct materials and conversion costs.

T

The last step in the preparation of a cost of production report is the computation of equivalent units of production.

F

Both job order costing and process costing use equivalent units of production to determine costs.

F

Conversion and direct materials costs are generally both added at the end of the production process.

F

Conversion costs are seldom added evenly throughout the manufacturing process.

F

Conversion costs include direct materials, direct labor, and factory overhead.

F

Custom-made goods would be accounted for using process costing.

F

Equivalent units are the sum of direct materials used and direct labor incurred.

F

Equivalent units of production are always the same as the total number of physical units finished during the period.

F

Gilbert Corporation had 25,000 finished units and 8,000 units 35% complete. The equivalent units totaled 30,200.

F

If 10,000 units that were 40% completed are in process at November 1, 80,000 units were completed during November, and 12,000 were 20% completed at November 30, the number of equivalent units of production for November was 75,600. (Assume no loss of units in production and that inventories are costed by the first-in, first-out method.)

F

If 10,000 units that were 50% completed are in process at November 1, 90,000 units were completed during November, and 20,000 were 20% completed at November 30, the number of equivalent units of production for November was 90,000. (Assume no loss of units in production and that inventories are costed by the first-in, first-out method.)

F

If 30,000 units of materials enter production during the first year of operations, 25,000 of the units are finished, and 5,000 are 50% completed, the number of equivalent units of production would be 28,500.

F

If a company uses the weighted average method instead of FIFO, it will still get the same unit costs.

F

If a department that applies the FIFO inventory cost flow method starts the reporting period with 50,000 physical units that were 25% complete with respect to direct materials and 40% complete with respect to conversion, it must add 12,500 equivalent units of direct materials and 20,000 equivalent units to direct labor to complete them.

F

If the costs for direct materials, direct labor, and factory overhead were $277,300, $52,600, and $61,000, respectively, for 14,000 equivalent units of production, the total conversion costs were $390,900.

F

If the costs for direct materials, direct labor, and factory overhead were $60,000, $35,000, and $25,000, respectively, for 20,000 equivalent units of production, the conversion cost per equivalent unit was $6.

F

If the products of a manufacturing process are produced to customer specifications, process costing is more appropriate than job order costing.

F

In applying the first-in, first-out method of costing inventories, if 8,000 units which were 30% completed are in process at June 1, 28,000 units were completed during June, and 4,000 units were 75% completed at June 30, the number of equivalent units of production for June was 33,400.

F

In applying the first-in, first-out method of costing inventories, if 8,000 units which were 30% completed are in process at June 1, 28,000 units were completed during June, and 4,000 units were 80% completed at June 30, the number of equivalent units of production for June was 28,600.

F

In process costing, a separate work in process inventory account is maintained for each customer's job.

F

In process costing, the cost per equivalent unit is computed before computing equivalent units.

F

Once equivalent units are computed for materials, this number will also be used for direct labor and factory overhead.

F

Process costing uses job cost sheets to accumulate cost data.

F

Process manufacturing usually reflects a manufacturer that produces small quantities of unique items.

F

The FIFO method of process costing is simpler than the weighted average method.

F

The cost of production report reports the cost of goods sold.

F

The direct materials costs and direct labor costs incurred by a production department are referred to as conversion costs.

F

The first step in preparing a cost of production report is to compute equivalent units of production.

F

If 16,000 units of materials enter production during the first year of operations, 12,000 of the units are finished, and 4,000 are 75% completed, the number of equivalent units of production would be 15,000.

T

If the costs for direct materials, direct labor, and factory overhead were $522,200, $82,700, and $45,300, respectively, for 16,000 equivalent units of production, the conversion cost per equivalent unit was $8.

T

If the principal products of a manufacturing process are identical, process costing is more appropriate than job order costing.

T

In process costing, conversion costs are usually incurred evenly throughout a process.

T

In process costing, costs are transferred from one work in process inventory account to the next as units are transferred from one processing department to another.

T

In process costing, costs flow into finished goods inventory only from the work in process inventory of the last manufacturing process.

T

In process costing, direct materials, direct labor, and factory overhead are assigned to each manufacturing process.

T

In process costing, each process will have a work in process inventory account.

T

In process costing, product costs are accumulated by processing department rather than by job.

T

Industries that typically use process costing include chemicals, oil, metals, food, paper, and pharmaceuticals.

T

One of the differences in process costing compared to job order costing is that the amounts used to transfer goods from one department to the next come from the cost of production report instead of job cost sheets.

T

Process manufacturers typically use large machines to process a continuous flow of raw materials into a finished state.

T

The FIFO method separates work done on beginning inventory in the previous period from work done on it in the current period.

T

The cost of production report shows the costs charged to production and the costs allocated to finished goods and work in process.

T

The cost of production report summarizes (1) the units for which the department is accountable and the units to be assigned costs and (2) the costs charged to the department and the allocation of those costs.

T

The direct labor costs and factory overhead costs incurred by a production department are referred to as conversion costs.

T