Accounting: Chap. 5,6 (4,5)
Job-order costing would be more likely to be used than process costing in situations where many different products or services are produced each period to customer specifications. True or False?
True
The units in beginning work in process inventory plus the units started into production must equal the units transferred out of the department plus the units in ending work in process inventory. True or False?
True
Under the weighted-average method, the cost of units transferred out of a department is computed as follows for a cost category:
Units transferred to the next department × Cost per equivalent unit
Which of the following types of companies would typically use process costing rather than job-order costing?
A breakfast cereal manufacturer.
In the cost reconciliation report under the weighted-average method, the "Total cost accounted for" equals:
Cost of ending work in process inventory + Cost of units transferred out
The cost reconciliation report has two sections: "Costs to be accounted for" followed by "Costs accounted for". The "Costs accounted for" portion of the cost reconciliation report includes the cost of beginning work in process inventory and the cost of units transferred out. True or False?
False
The equivalent units in beginning work in process inventory plus the equivalent units in ending work in process inventory equals the units transferred out plus the equivalent units for the work done during the period. True or False?
False
When all materials are added at the beginning of the production process, under a weighted-average process costing system the equivalent units for materials is equal to the units completed and transferred out. True or False?
False
When materials are purchased in a process costing system, a work in process account is debited with the cost of the materials. True or False?
False
In the cost reconciliation report under the weighted-average method, the "Costs to be accounted for" section contains which of the following items?
Cost of beginning work in process inventory
A job-order costing system would be best suited for production of a large quantity of a homogeneous product. True or False?
False
In a process costing system, costs are traced directly to jobs. True or False?
False
In process costing, the equivalent units computed for materials is generally the same as that computed for conversion costs. True or False?
False
Process costing is employed in industries that produce basically homogeneous products such as bricks, flour, or cement but would not be appropriate for assembly-type operations such as those that manufacture computers. True or False?
False
The smaller the contribution margin ratio, the smaller the amount of sales required to cover a given amount of fixed expenses. True or False?
False
A flour manufacturer is more likely to use process costing than job-order costing whereas a manufacturer of customized leather jackets is more likely to use job-order costing than process costing.
True
If fixed expenses increase by $10,000 per year, then the sales needed to break even will generally increase by more than $10,000. True or False?
True
In calculating cost per equivalent unit under the weighted-average method, prior period costs are combined with current period costs. True or False?
True
When computing the cost per equivalent unit, the weighted-average method of process costing considers:
costs incurred during the current period plus cost of beginning work in process inventory.
A process costing system is employed in those situations where:
where manufacturing involves a single, homogeneous product that flows evenly through the production process on a continuous basis.