Accounting 307 - Chapter 8

Department A's beginning work in process for materials cost totaled $15,000. Current material costs for the month equal $90,000, and there are 5,000 equivalent units. Material cost per equivalent unit using FIFO costing is $

18

Department A's beginning work in process conversion costs were $6,675. During the month, total conversion costs were $32,700. Total equivalent units are 10,000 for materials and 7,500 for conversion costs. The cost per equivalent unit for conversion costs using the weighted-average method is A. $5.25 B. $3.94 C. $4.36 D. $3.27

A

Operation costing is best suited for manufacturing goods that A. have some common and some individual characteristics B. are unique in nature and produced in one or two departments C. are relatively uniform in nature and are produced in multiple departments

A

Sections 1 and 2 of the production cost report relate to A. managing the physical flow of units B. managing revenues C. managing costs

A

Sections 3, 4, and 5 of the production cost report relate to A. managing costs B. managing revenues C. managing the physical flow of units

A

Step 3 in process costing is to identify the total costs to be accounted for. Which of the following describes that step? A. Total costs to be accounted for = Costs in beginning WIP inventory + Costs incurred this period B. Total costs to be accounted for = Costs in beginning WIP inventory ÷ Costs incurred this period C. Total costs to be accounted for = Costs in beginning WIP inventory × Costs incurred this period D. Total costs to be accounted for = Costs in beginning WIP inventory - Costs incurred this period

A

The key difference between operation costing and job and process costing is that for each work order or batch passing through a particular operation, A. direct materials are different but conversion costs are the same B. direct labor is the same and manufacturing overhead is different C. direct labor is different and manufacturing overhead is the same D. direct materials are the same and conversion costs are different

A

Advantages of FIFO costing over weighted-average costing include A. it is easier to identify and manage current period costs B. inventory numbers are more likely to reflect reality C. it provides a better picture of the actual cost of the product by adding beginning inventory costs to current costs

A and B

Prior department costs are A. generally excluded for performance evaluation purposes B. often excluded when comparing actual department costs with budgeted costs C. generally excluded when assigning costs to units for inventory valuation purposes

A and B

Which of the following are true? A. Process costing does not maintain a record of the cost of each unit produced. B. Process costing generally has lower recordkeeping costs than job costing. C. Process costing provides more detailed information than job costing. D. Job costing does not maintain a record of the cost of each unit produced.

A and B

Which of the following sections of the production cost report focus on managing the physical flow of units? A. Section 2 B. Section 1 C. Section 5 D. Section 4 E. Section 3

A and B

FIFO costing A. transfers out costs in beginning inventory in a lump sum B. assumes that the last items worked on are the first items transferred out of production C. separates current period costs from those in beginning inventory D. makes it impossible to know how much it costs to make a product this period

A and C

Which of the following are included in Section 5 of the production cost report when using FIFO costing? A. Costs to complete beginning inventory. B. Costs of units started and completed in the current period. C. Costs estimated to complete units in the subsequent period. D. Costs of ending work-in-process inventory.

A, B, and D

Direct labor is sometimes treated as part of manufacturing overhead because it is A. required to be treated as a conversion cost under operations costing B. a small portion of total product cost C. too difficult to trace to the cost directly to production

B

Process costing can A. be used in place of job order costing for unique production B. be adapted to reflect production flows that are not totally homogeneous C. only be used when all units are homogeneous and follow the same path through the production process

B

When compared with the weighted-average method of process costing, the FIFO method results in unit costs that better reflect current costs A. when beginning inventory is relatively small compared to units started B. when price changes are large C. in no cases D. in all cases

B

When comparing weighted-average and FIFO, A. both measuring the physical flow of resources and computing the equivalent units of production are the same under the two methods B. measuring the physical flow of resources is the same under the two methods C. computing the equivalent units of production is the same under the two methods D. both measuring the physical flow of resources and computing the equivalent units of production are different under the two methods

B

Which of the following statements is true? A. Costs in beginning inventory are ignored when computing costs to be accounted for under weighted-average costing. B. Costs in beginning inventory plus current costs are accounted for under both weighted-average and FIFO costing. C. Costs in beginning inventory are ignored when computing costs to be accounted for under FIFO costing. D. Current costs are accounted for when using weighted-average costing but ignored when using FIFO costing.

B

Prior department costs are A. also called transferred-out costs B. also called transferred-in costs C. conceptually equivalent to raw materials costs D. conceptually equivalent to prior period costs

B and C

Process costing assumes that A. units rarely follow the same path through the production processes B. all units follow the same path through the production processes C. all units are homogeneous D. all units are unique

B and C

The costs of units transferred out of one department and into another are A. conceptually equivalent to finished goods costs B. called prior department costs C. relatively easy to calculate

B and C

The production cost report A. is a complex financial statement used for external reporting B. includes the five steps for assigning costs to goods transferred out and to ending work-in-process inventory C. summarizes production revenue for a period D. summarizes the production and cost results for a period

B and D

Which of the following are true of process costing? A. FIFO costing adds the costs together first and then divides this total cost by the total work for the two periods. B. Weighted-average costing adds the costs together first and then divides this total cost by the total work for the two periods. C. Weighted-average costing keeps the costs and the work separate and, in effect, computes separate unit costs for the two periods. D. FIFO costing keeps the costs and the work separate and, in effect, computes separate unit costs for the two periods.

B and D

Which of the following statements are true? A. The difference between job costing and process costing is in the basic concepts of the methods. B. Record-keeping costs are usually lower with process costing than with job costing. C. Job costing provides more information than process costing. D. The production process is a major factor in choosing a costing system.

B, C, and D

Which of the following sections of the production cost report focus on managing costs? A. Section 2 B. Section 3 C. Section 1 D. Section 5 E. Section 4

B, D, and E

Department A's beginning work in process conversion costs were $6,675. During the month, total conversion costs were $32,700. Total equivalent units were 10,000 for materials and 7,500 for conversion costs. The cost per equivalent unit for conversion costs using the FIFO method equals A. $3.94 B. $5.25 C. $4.36 D. $3.27

C

Department XY started the month with 1,000 units in work in process that were 100% complete as to materials and 70% complete as to conversion costs. During the month, 12,000 units were started, and 9,000 units were completed and transferred to Department ZT. The ending work in process units in Department XY are 100% complete as to materials and 40% complete as to conversion costs. Equivalent units of production for Department XY using weighted-average process costing equals A. 13,000 units for materials and 9,000 units for conversion costs B. 12,000 units for materials and 9,900 units for conversion costs C. 13,000 units for materials and 10,600 units for conversion costs D. 10,000 units for materials and conversion costs E. 8,000 units for materials and conversion costs

C

Equivalent units computed under the FIFO method are______ equivalent units computed under weighted-average method. A. greater than or equal to B. greater than C. less than or equal to D. less than

C

In many companies,______ is(are) a small portion of the total product cost and, therefore, classified as part of manufacturing overhead. A. direct material and direct labor B. direct material C. direct labor

C

In process costing, separate unit costs are computed for each period work is in process under A. weighted-average costing only B. both FIFO and weighted-average C. first-in, first-out (FIFO) costing only D. neither FIFO nor weighted-average

C

Prior department costs are included in department product cost calculations for A. neither inventory valuation or performance evaluation B. both inventory valuation and performance evaluation C. inventory valuation only D. performance evaluation only

C

Total costs to be accounted for A. under FIFO will only be the same as weighted-average when there is no beginning inventory B. under FIFO will only be different than weighted-average costing when there is ending work-in-process inventory C. is always the same under both FIFO and weighted-average costing D. under FIFO costing is always different than total costs to be accounted for under weighted-average costing

C

Under FIFO costing, equivalent units of production for both direct materials and conversion costs are computed A. for goods started and completed and ending work in process only B. the same way as with weighted-average costing C. in three separate parts

C

When compared to job costing, the cost of record-keeping is generally______ when using process costing. A. higher B. the same C. lower

C

When the number of units in beginning work-in-process units is large relative to the number of units started during the period, A. the weighted-average method results in unit costs that better reflect current costs than the FIFO method B. there is little difference in cost between the weighted-average and FIFO method of costing C. the FIFO method results in unit costs that better reflect current costs than the weighted-average method

C

When using FIFO costing, the costs to be accounted for on the production report (Section 3) is______ the total cost accounted for in Section 5. A. equal to or less than B. never equal to C. always equal to D. equal to or greater than

C

An equivalent unit is A. the number of estimated units to be completed multiplied by the number of physical units completed B. the number of physical units divided by the estimated percentage that an average unit in inventory is complete with respect to all resources C. the number of estimated units to be completed divided by the number of physical units completed D. the number of physical units multiplied by the estimated percentage that an average unit in inventory is complete with respect to the individual resource

D

Assigning costs to ending work-in-process inventory and goods transferred out is the______ step in the five-step process. A. fourth B. third C. second D. final E. first

D

Department XY started the month with 1,000 units in work in process that were 100% complete as to materials and 70% complete as to conversion costs. During the month, 12,000 units were started, and 9,000 units were completed and transferred to Department ZT. The ending work in process units in Department XY are 100% complete as to materials and 40% complete as to conversion costs. Equivalent units of production for Department XY using FIFO costing equals A. 13,000 units for materials and 10,600 units for conversion costs B. 12,000 units for materials and 9,600 units for conversion costs C. 8,000 units for materials and conversion costs D. 12,000 units for materials and 9,900 units for conversion costs

D

The key difference between operations costing and job and process costing is that______ are different. A. direct materials and direct labor B. direct labor and conversion costs C. conversion costs D. direct materials

D

Department 1 started the month with no work in process. During the month, 10,000 units were started, and 8,000 units were completed and transferred to Department 2. The ending work in process units in Department 1 are 100% complete as to materials and 70% complete as to conversion costs. Equivalent units of production for Department 1 using weighted-average process costing equals A. 8,000 units for materials and conversion costs B. 10,000 units for materials and 8,000 units for conversion costs C. 10,000 units for materials and 7,000 units for conversion costs D. 9,400 units for materials and conversion costs E. 10,000 units for materials and 9,400 units for conversion costs

E

The final step in the costing process is to A. compute the equivalent units of production B. identify the product costs for which to account C. measure the physical flow of resources D. compute the costs per equivalent unit E. assign product costs to batches of work

E

A hybrid of job and process costing is called

operation

Managers can use the..........-...........report to help determine whether inventory levels or costs are too high or the number of units produced is too low

production cost