Chapter 3 Quiz questions

Under a process costing​ system, product costs are accumulated with respect to jobs completed.

false

Under the first-​in, first-out ​(FIFO) method, the current period equivalent units of production for transferred in units in beginning inventory are zero because​ ________.

no additional costs for these units were incurred in the current period

Costs are accumulated by​ ________ in a process cost system.

process

In a process costing​ system, a​ department's total production costs incurred in a particular period must equal the total costs transferred out of the department.

false

In a production cost​ report, the number of units to account for must always be greater than the number of units accounted for.

false

In process​ costing, equivalent units of production for transferred in are usually​ 100%.

false

In the weighted−average method for the production cost​ report, the units in beginning work−in−process are not considered as part of units accounted for in the production cost report.

false

Production cost reports prepared using the first-​in, first-out ​(FIFO) method assume that the first units started in the production process are the last units completed and sold.

false

The combined production costs from all departments for completed products are transferred to the Cost of Goods Sold account immediately after the completion of all production processes.

false

The number of equivalent units for direct materials and conversion costs must always be equal.

false

The weighted average method determines the cost of equivalent units of production by accounting for beginning inventory costs separately from current period costs.

false

The weighted average method determines the number of equivalent units of production by accounting for completed and transferred out units plus percentage completed of ending work in process units.

false

There were​ 20,000 units completed and transferred out and​ 5,000 units that are​ 20% completed for conversion costs. All materials costs are added at the beginning of production. Using the weighted average ​method, the total equivalent units of production accounted for is​ 21,000 units for direct materials.

false

Under process​ costing, a single WorkinProcess Inventory account is maintained for all​ processes, with a subsidiary ledger containing individual production cost reports for each process.

false

Under process​ costing, the unit cost of the completed units is less than the unit cost of the incomplete units.

false

Under the first​-in, first-out ​(FIFO) method, the current period equivalent units of production for the units in the beginning inventory are always​ 100% complete.

false

In process​ costing, when the production costs have to be split between completed and in process​ units, we cannot just divide the total cost by the number of units started to determine the unit cost because​ ____________________.

some units are not completed

A process is one of a series of steps in​ manufacturing, usually associated with making large quantities of similar items.

true

A production cost report can help managers identify the most profitable products.

true

A production cost report cannot be used for the pricing of products because it depicts only the ways to control product costs.

true

A production cost report helps managers identify the costs that can be reduced in the production process.

true

At the end of an accounting​ period, the costs assigned to a production department can be split into the cost of units fully completed and transferred​ out, and the cost of units partially completed and remaining in the WorkinProcess Inventory of that department.

true

Both job order costing and process costing track the product costs of direct​ materials, direct​ labor, and manufacturing overhead through three inventory accounts on the balance sheet.

true

Cost amounts that are transferred out of one department become the transferred in cost for the next department.

true

In a process costing​ system, costs can be controlled with the aid of a production cost report.

true

In a process costing​ system, each process or department has its own WorkinProcess Inventory account.

true

In a process costing​ system, equivalent units of production must be calculated separately for materials and conversion costs.

true

In most​ organizations, managers are often rewarded based on how well they meet the budget.

true

In process​ costing, costs that were incurred in a previous process and brought into a later process as part of the​ product's cost are transferred in costs.

true

The cost per equivalent unit for transferred in units is calculated by dividing total transferred in costs by the equivalent units of production for transferred in units.

true

The equivalent units of production for transferred in units are always​ 100%.

true

The last step on the production cost report when using the weighted average method is to determine where the total costs to be accounted for should be assigned.

true

The task of summarizing the flow of physical units is one of the four steps involved in the preparation of the production cost report.

true

There were​ 20,000 units completed and transferred out and​ 5,000 units that are​ 20% completed for conversion costs. All materials costs are added at the beginning of production. Using the weighted average ​method, the total equivalent units of production accounted for is​ 21,000 units for conversion costs.

true

Under a process costing​ system, costs of completed products are transferred to the Finished Goods Inventory at the end of the accounting period.

true

Under process​ costing, direct materials and direct labor are assigned to WorkinProcess Inventory for each process that uses them.

true

Under process​ costing, the costs incurred by each department are reported in a separate production cost report for each department.

true

Under the first​-in, first-out ​(FIFO) method, prior period costs are not merged with current period costs.

true

When preparing a production cost​ report, the weighted average method merges costs from the prior period with the current costs.

true

In a production cost report prepared under the FIFO​ method, equivalent units of production are NOT computed for​ ________.

units started and completed in the current period

Howard Company has the following information for the current period for the Welding​ Department: Costs of beginning work−in−​process: Direct materials ​$38,000 Conversion costs ​29,000 Costs added during the​ period: Direct materials ​270,200 Conversion costs ​95,900 Equivalent units of production​ for: Direct materials ​15,400 units Conversion ​9,600 units Using the weighted−average ​method, what is the cost per equivalent unit for​ materials?

$20.01

Alchemy Manufacturing produces a pesticide chemical and uses process costing. There are three processing departments—​Mixing, ​Refining, and Packaging. On January​ 1, the first department—Mixing—had no beginning inventory. During​ January, 46,000 fl. oz. of chemicals were started in production. Of​ these, 30,000 fl. oz. were completed and 16,000 fl. oz. remained in process. In the Mixing​ Department, all direct materials are added at the beginning of the production​ process, and conversion costs are applied evenly throughout the process. The weighted−average method is used. At the end of the​ month, Alchemy calculated equivalent units of production. The ending inventory in the Mixing Department was 70​% complete with respect to conversion costs. With respect to direct​ materials, what is the number of equivalent units of production in the ending​ inventory?

16000

During​ August, the Filtering Department of​ Speedwell, Inc. had a beginning Work−in−Process Inventory balance of 150 units with costs of​ $50,000. During the​ month, it started and completed 260 units. It had 30 units in the ending Work−in−Process Inventory. What is the number of equivalent units of production for transferred in units in the Filtering Department in August under the first−​in, first−out ​(FIFO) method?

290

Conversion costs include the costs of purchasing and converting raw materials into finished products.

false

On September​ 30, the Sorting Department of Java Works had ending Work-in-Process Inventory of​ 30,000 units that was 47 ​% complete for materials and ​35 % complete for conversion costs. The company uses the FIFO method. This means that for the beginning Work-in-Process ​Inventory, ________% of the materials and​ ________% of conversion costs were added during October.

53:65

The Refining Department of​ Kristian, Inc. had​ 80,000 pounds of materials to account for in the current month. Of the​ 80,000 pounds,​ 66,000 pounds were completed and transferred to finished​ goods, and the remaining​ 14,000 pounds were​ 80% complete. The materials required for production are added at the beginning of the process. Conversion costs are added evenly throughout the refining process. The weighted average method is used. Calculate the total equivalent units of production for direct materials.

80,000

Conversion costs include​ ________.

direct labor and manufacturing overhead costs

A process costing system is most suitable for businesses that manufacture batches of unique products or provide specialized services.

false

A production cost report shows only the calculations for the physical flow of products.

false

When calculating the cost per equivalent unit in process​ costing, what is the difference between the weighted average and FIFO​ methods?

With​ FIFO, prior period costs are not combined with current period costs.