Unit 3 tests

41,200 cases Correct! The equivalent units of production is (2,000 cases × 70%) + 38,000 cases + (3,000 cases × 60%) = 41,200 cases.

Here are data for Endothon for the month of June: -Beginning inventory: 2000 cases 30% completed -Started and completed: 38,000 cases -Ending inventory of gum: 3,000 cases 60% completed What is Endothon's equivalent units of production for June? *38,000 cases *41,200 cases *43,000 cases *40,400 cases

A single manufacturing process for a single period Correct! Equivalent units are the work performed on beginning work-in-process inventory, units started and completed, and ending work-in-process in a single process for a single period.

For which process in process costing is the number of equivalent units of production calculated for? -A single manufacturing process for multiple periods -Multiple manufacturing processes for a single period -A single manufacturing process for a single period -Multiple manufacturing processes for multiple periods

Producing chewing gum Correct! Every piece of gum in a package and every package of each type of gum is basically the same, so process costing would work best for making gum.

Process costing would work best when making which products? -Constructing a highway bridge -Producing chewing gum -Completing the corporate tax return for a corporation -Manufacturing a brand of trucks

Conversion costs Correct! Conversion costs are the direct labor and manufacturing overhead costs that are required to convert raw materials into finished goods.

What are the sum of direct labor and manufacturing overhead costs referred to in a process costing system? -Total manufacturing costs -Finished goods inventory -Manufacturing costs -Conversion costs

Calculate the average cost using total manufacturing costs for each product Correct! The average cost of each product is calculated by dividing the total manufacturing costs by the number of units produced during that period when using process costing.

A company is using process costing, which cost step should be followed? -Calculate the direct labor costs for each product -Calculate the manufacturing overhead costs for each product -Calculate the direct materials costs for each product -Calculate the average cost using total manufacturing costs for each product

$159,360 of goods transferred out and $4,320 of ending work-in-process inventory Correct! To get the $164,680 you need to add the ending work-in-process inventory to the goods that were transferred to finished goods.

According to Kretsmart's schedules above, the total dollars spent on work transferred out and ending inventory totalled $163,680. Which calculation accurately describes how to convert costs for work transferred out and ending inventory? *$146,080 of work transferred out plus $17,600 of work-in-process inventory *$163,680 of finished goods inventory *$163,680 of inventory transferred from finished goods to cost of goods sold *$159,360 of goods transferred out and $4,320 of ending work-in-process inventory

2812.5 Correct! Beginning inventory was 30% complete, so 70% or 10.5 equivalent returns of beginning inventory were completed. Ending inventory was 30 returns at 40% finished, which is the equivalent of 12 returns. This 10.5 of beginning inventory is added to the 2790 that were started and completed and the 12 in ending inventory to get the correct answer of 2812.5 equivalent returns completed during February.

Alliah Company is a tax preparation firm that prepares tax returns for individuals. It has 12 tax return preparers who can each prepare approximately 20 returns per day. Its tax return productivity for the month of February is as follows: -Beginning tax returns in process as of February 1: 15 returns at 30% complete -Started and completed tax returns: 2790 returns -Ending tax returns in process as of February 28: 30 returns at 40% complete What is Alliah Company's total equivalent number of returns for the month of February? *2806.5 *2812.5 *2820 *2805

You would add the work required to complete the units in beginning inventory to the number of units started and completed during the period to the degree of completion of the ending inventory units. Correct! To determine the equivalent units of production in this situation in this period, you would add the work required to complete the units in beginning inventory plus the number of units started and completed during the period plus the degree of completion of the ending inventory units.

Assume a production process using process costing starts with a certain number of units in beginning inventory that are partially completed, a certain number of units are started and completed during the period, and the ending inventory at the end of the period is partially complete. How would you determine the equivalent units of production in this situation for the period? -You would add the work required to complete the units in beginning inventory to the number of units started and completed during the period to the degree of completion of the ending inventory units. -You would add the work required to complete the units in beginning inventory plus the degree of completion of the ending inventory units. -You would add the work required to start and complete the units started during the period plus the degree of completion of the ending inventory units. -You would add the work required to complete the units in beginning inventory plus the number of units started and completed during the period.

$6,000 for direct materials and $5,400 for conversion costs for a total of $11,400 The correct answer is calculated as follows: Because the work-in-process inventory is 100% complete as to direct materials, the cost for direct materials is $2 × 3,000 units or $6,000. Because the conversion costs are only 60% complete, the conversion costs for the period are $5,400 for a total of $11,400.

Assume there are 3,000 units in ending work-in-process inventory, the unit cost for direct materials is $2.00, and the unit cost for conversion costs is $3.00. If the ending inventory is 100% complete as to direct materials and 60% complete as to conversion costs, what is the cost of ending work-in-process inventor? -$3,600 for direct materials and $9,000 for conversion costs for a total of $12,600 -$6,000 for direct materials and $5,400 for conversion costs for a total of $11,400 -$3,600 for direct materials and $5,400 for conversion costs for a total of $9,000 -$6,000 for direct materials and $9,000 for conversion costs for a total of $15,000

Only the direct materials costs and conversion costs of the current period Correct! Note that in the product costs per unit schedule, only the current period costs were included in the $1.66. The beginning inventory costs of $4,000 were kept separate.

At Kretsmart, in the current period, the total cost per unit was $1.66. Which costs are used to calculate per unit price? -Only the direct materials costs and conversion costs of both the units of beginning inventory and ending inventory for the current period -Only the direct materials costs and conversion costs in ending work-in-process inventory -Only the direct materials costs and conversion costs of the current period -Only the costs of direct materials and conversion in the beginning inventory

Direct materials were used in production before all the conversion costs. Correct! The direct materials costs were 100% incurred in beginning inventory, but conversion costs were only 80% incurred.

At Kretsmart, which of the following is incurred in beginning inventory? -Direct materials were used in production prior to direct labor but not manufacturing overhead. -Direct materials were used in production prior to manufacturing overhead, but not direct labor. -Direct materials and all the conversion costs were expended at the same time. -Direct materials were used in production before all the conversion costs.

12,340 gallons Correct! Because the 400 gallons in beginning inventory were 40% completed at the beginning of December, 60% of the equivalent of 240 gallons were completed in December. Because the ending inventory was 20% complete, only one-fifth or 100 gallons were complete in December. Therefore, the total equivalent number of units is 12,340 (240 from beginning inventory, 12,000 started and completed, and 100 in ending inventory).

Bullzai Company makes paint. It has two departments—mixing and coloring. Its production records for December were as follows: -Beginning inventory: 400 gallons of paint at 40% completed -Started and completed during December: 12,000 gallons -Ending inventory: 500 gallons at 20% complete What is Bullzai's equivalent number of gallons of paint produced in December? *12,260 gallons *12,340 gallons *12,400 gallons *12,500 gallons

Making wood chopsticks Correct! While there may be some very expensive custom chopsticks, most chopsticks are two small pieces of wood all made in the same way and identical when finished.

For which process should process costing be used? -Making rockets to go to the moon -Making expensive luxury cars -Making custom bicycles -Making wood chopsticks

Costs in beginning work-in-process inventory from the prior period, costs to complete beginning inventory, and costs of units made and finished during the current period Correct! All three of these costs are included in either ending work-in-process inventory or units transferred out.

From which three sources do the total cost of ending work-in-process inventory and units transferred out come from? -Costs in beginning work-in-process inventory from prior periods, costs to complete beginning inventory, and cost of goods sold -Costs in beginning work-in-process inventory from the prior period, costs to complete beginning inventory, and cost of goods sold -Costs in beginning work-in-process inventory from the prior period, costs to complete beginning inventory, and costs of units made and finished during the current period -Costs in beginning work-in process inventory from prior periods, costs of units made and finished during the current period, and costs of goods sold

96,100 cans Correct! Equivalent cans of paint for February is 2,000 cans completed × 80% worked on this period or 1,600 plus 90,000 that were started and completed and 15,000 cans of ending inventory × 30% completed, or 4,500 for a total of 96,100 cans. (2,000 × 80%) + 90,000 + (15,000 × 30% completed) = 96,000.

Here are data for Alliah Paint for the month of February: -Beginning cans of paint: 2,000 that were 20% completed -Started and finished cans of paint: 90,000 cans of paint -Started but only 30% completed: 15,000 cans of paint What is Alliah Paint's equivalent number of cans of paint in February? *107,000 cans *106,600 cans *94,900 cans *96,100 cans

85,200 Correct! The conversion costs represent the total direct labor and manufacturing overhead costs: $72,000 + $13,200 = $85,200.

Here are data for Bullzai for the month of January: -Direct material costs: $14,800 -Direct labor costs: $72,000 manufacturing -Overhead: $13,200 What is Bullzai's total conversion costs for the period? *$85,200 *$28,000 *$86,800 *$100,000

$16.00 Correct! The beginning inventory this period was 60% × 1,000 units, or 600. This 600 is added to the 30,000 that were started and completed and 60% of the 800 units in ending inventory, so the correct answer is 600 + 30,000 + 480 = 31,080. This 31,080 divided into $497,280 is $16.

Here are data for Herbert Phone Company: -Conversion costs this period: $497,280 -Beginning inventory: 1,000 at 40% complete as to conversion costs -Started and completed: 30,000 units -Ending inventory: 800 units at 60% complete as to conversion costs Given these data, what is Herbert's cost per equivalent units for conversion costs for the period? *$16.00 *$17 *$16.10 *$16.08

100,000 Correct! This answer was calculated by adding all three types of manufacturing costs together: $14,800 + $72,000 + $13,200 = $100,000. This answer is the total cost of manufacturing in the bagging center for January.

Here are data for Kretsmart for the month of March: -Direct material costs: $14,800 -Direct labor costs: $72,000 -Manufacturing overhead: $13,200 What was Kretsmart's total cost of production for the month of March? *$85,800 *$85,200 *$28,000 *$100,000

Finished goods inventory Correct! In a process costing system, after all work is completed in the process centers, the costs are transferred to finished goods inventory.

In a process costing system, production costs are accumulated in the process centers. Where do the costs go when all production work is completed in the process centers? -Selling, general, and administrative expenses -Finished goods inventory -Manufacturing overhead -Raw materials inventory

The units in beginning inventory and the units started during the current period Correct! The units in beginning inventory and the units started make up all the units active during the current period. Those "in play" units will either be completed and transferred out or remain in ending work-in-process inventory.

In process costing, the units completed and the units remaining in ending work-in-process inventory at the end of the period come from which of the following? -Only the units in ending inventory in the current period -Only the units started during the current period -The units in ending inventory and the units started during the period -The units in beginning inventory and the units started during the current period

A. 0 Correct! If all the direct materials were added in the prior period (which they were for the beginning work-in-process inventory), there are no equivalent units for direct materials this period for the beginning work-in-process inventory.

Jaunty Coffee Company has 1,000 units in beginning work-in-process inventory that are 100% complete with respect to direct materials. A total of 5,000 units were started during the period. A total of 2,000 units were in the ending work-in-process inventory. What are the equivalent units for direct materials in the beginning work-in-process inventory for the current period? A. 0 B. 6,000 C. 5,000 D. 2,000

After direct materials have been introduced into each process Correct! Direct materials are usually put into production at the beginning of each process and then worked on, so the direct labor and manufacturing overhead costs usually come throughout the process, not at the beginning like direct materials.

Marcos Company uses process costing to make paint. There are two processing departments—mixing and coloring. In which stage of each process would the conversion costs composed of direct labor and manufacturing overhead be incurred? -At the same time direct materials are introduced into each process -It is impossible to tell because the order of the incurrence of direct materials and conversion costs is different in every company and every process. -Before direct materials have been introduced into each process -After direct materials have been introduced into each process

They are carried forward as beginning work-in-process inventory for the next period. Correct! The total production costs remaining in work-in-process inventory at the end of the period are carried forward as beginning work-in-process inventory for the next period and are included in the production cost computations for that subsequent period.

Michael Yoshida is a new accountant at Dellberg Manufacturing Company. Frank studied process costing in school, but it has been a couple of years since he reviewed the material. Frank has been asked by Dellberg's head accountant (the controller) to do the adjustment necessary to account for the total production costs remaining in work-in-process inventory at the end of the period. Michael is trying to remember the correct treatment. In a process costing system, what happens to the total production costs remaining in work-in-process inventory at the end of the period? -They are added to cost of goods sold. -They are added to manufacturing overhead. -They are carried forward as beginning direct materials inventory for the next period. -They are carried forward as beginning work-in-process inventory for the next period.

48,600 cases Correct! Because the ginning inventory was 60% complete at the beginning of the period, 40% or 1,200 equivalent units of beginning inventory were produced. Because the 2,000 units of ending inventory were 70% completed this period, the equivalent units in ending inventory is 1,400. The correct answer is the 1200 units of beginning inventory, the 1,400 units of ending inventory, and the 46,000 cases started and completed for a total of 48,600 cases.

Orange Zest Café makes premixed protein drinks that are sold in grocery stores. Its records for December contained the following information: -Beginning work-in-process: 3,000 cases at 100% complete for direct materials and 60% for conversion costs -Started and completed: 46,000 cases -Ending work-in-process: 2,000 cases at 100% complete for direct materials and 70% for conversion costs What is Orange Zest Café's conversion cost equivalent units of production for December? *51,000 cases *48,600 cases *48,000 cases *49,200 cases

48,000 cases Correct! All the material for the beginning inventory was complete at the beginning of the period, and so none of it was done this period. The ending inventory was 100% completed this period, and so the equivalent number of units for direct materials is the 2,000 cases in ending inventory plus the 46,000 cases that were started and completed.

Orange Zest Café makes premixed protein drinks that are sold in grocery stores. Its records for December contained the following information: -Beginning work-in-process: 3,000 cases at 100% complete for direct materials and 60% for conversion costs -Started and completed: 46,000 cases -Ending work-in-process: 2,000 cases at 100% complete for direct materials and 70% for conversion costs What is Orange Zest Café's direct materials equivalent units of production for December? *48,000 cases *50,000 cases *51,000 cases *49,000 cases

36,500 units Correct! Beginning inventory of 1,000 units × 50% completed during the period = 500 units + 35,000 units started and completed during the period × 100% = 35,000 + Ending inventory of 2,000 units × 50% = 1,000 for a total of 36,500 total equivalent units for the month of March for both material and conversion costs.

Plairtrack Company has determined its equivalent number of units for the month of March is as follows: -Beginning inventory (50% complete): 1,000 units -Started and completed: 35,000 units -Ending inventory (50% complete): 2,000 units Both material costs and conversion costs are added evenly throughout the production process. What is Plairtrack's total equivalent number of units for the month of March? *36,500 units *35,500 units *35,000 units *38,000 units

5,310 units The correct answer is calculated as follows: The equivalent number of units would be 100 units at 70% or 70 units plus 5,000 units started and completed plus 400 units that were 60% completed for a total of 5,310 units [(100 × 70%) + 5,000 + (400 × 60%) = 5,310 units].

The beginning inventory for a company is 100 units at 30% complete. A total of 5,000 units were started and completed during the period. Ending inventory is 400 units at 60% complete. How much is the company's equivalent units for the period? -5,270 units -5,500 units -5,310 units -5,000 units

The conversion cost per equivalent unit this period multiplied by the conversion cost number of equivalent units Correct! The conversion cost of ending work-in-process inventory is calculated by multiplying the conversion cost per equivalent unit this period and the conversion cost number of equivalent units.

The conversion cost of ending work-in-process inventory is equal to which of the following? -The conversion cost per actual units in beginning inventory multiplied by the conversion cost number of equivalent units -The conversion cost per equivalent unit this period multiplied by the conversion cost number of equivalent units -The conversion cost per equivalent unit this period multiplied by the direct materials cost number of equivalent units -The conversion cost per actual units transferred out multiplied by the conversion cost number of equivalent units

Cost per unit of direct materials times equivalent units for materials plus conversion costs per unit times the number of equivalent units for conversion costs Correct! This is the correct formula for calculating the cost of ending work-in-process inventory.

The costs of ending work-in-process inventory is calculated by which of the following formulas? -Cost per unit of direct materials times equivalent units for materials plus conversion costs per unit times the number of equivalent units for conversion costs -Cost for direct materials per unit times the number of equivalent units for direct materials -Cost per unit for conversion costs times the number of equivalent units for conversion costs -Cost per unit for direct materials times equivalent units for materials minus conversion costs per unit times the number of equivalent units for conversion costs

The cost of beginning work-in-process inventory, both materials and conversion costs; the cost per equivalent unit required to complete those units in beginning inventory; and the cost per equivalent unit of the items started and completed this period, both materials and conversion costs Correct! It is these three costs that make up the costs of the units transferred out to finished goods.

The costs that are associated with units completed and transferred out this period are the sum of which components? -The cost of beginning work-in-process inventory, both materials and conversion cost, and the cost per equivalent unit required to complete those units in beginning inventory -The cost of beginning work-in-process inventory, both materials and conversion costs; the cost per equivalent unit required to complete those units in beginning inventory; and the cost per equivalent unit of the items started and completed this period, both materials and conversion costs -The cost per equivalent unit required to complete the units in beginning inventory and the cost per equivalent unit of the items started and completed this period, both materials and conversion costs. -Only the cost per equivalent unit of the items started and completed this period, both materials and conversion costs.

The sum of the cost of goods transferred out and the cost of ending work-in-process inventory Correct! The total dollars in, or total processing dollars spent during a period, is equal to the cost of goods transferred out and the cost of ending work-in-process inventory. Goods worked on were either not finished and are in ending inventory, or they are finished and transferred out. The ending inventory of one period becomes the beginning inventory of the next period and cannot be double counted.

What are the total processing dollars spent during a period in a process center equal to? -The sum of costs in beginning inventory, the cost of goods transferred out, and the cost of ending work-in-process inventory -Only the cost of goods transferred out -Only the cost of ending work-in-process -The sum of the cost of goods transferred out and the cost of ending work-in-process inventory

They are carried forward as beginning work-in-process inventory for the next period. Correct! The total production costs remaining in work-in-process inventory at the end of the period are carried forward as beginning work-in-process inventory for the next period and are included in the production cost computations for that subsequent period.

What happens to the total production costs remaining in work-in-process inventory at the end of the period? -They are added to manufacturing overhead. -They are carried forward as beginning work-in-process inventory for the next period. -They are added to cost of goods sold. -They are carried forward as beginning direct materials inventory for the next period.

The units go through process centers when being produced. Correct! With process costing, every unit goes through at least two process centers where costs are accumulated by period and the average cost of all products is computed.

What is a unique feature of process costing? -The presence of manufacturing overhead costs -The presence of direct materials in the finished goods -The ability to attach specific costs to specific products -The units go through process centers when being produced.

Equivalent units of production Correct! Equivalent units of production is the measure of work done or performed during a period. It is needed to calculate the unit cost of direct materials and conversion costs.

What is another name for the "work done" or "work performed" during a period under process costing? -Equivalent units of production -Total units in ending inventory -Conversion costs -Total units completed and transferred out

Beginning inventory cost carried forward from the previous period, the cost per equivalent unit required to complete units in beginning inventory, and the cost per equivalent unit of items started and completed this period

What is included in the cost of units completed and transferred to finished goods for this company? -Beginning inventory cost carried forward from the previous period, the cost per equivalent unit required to start units during this period, and the cost per equivalent unit required to complete units during this period -Only current period costs incurred for those units transferred out -Only prior period costs incurred for those units transferred out -Beginning inventory cost carried forward from the previous period, the cost per equivalent unit required to complete units in beginning inventory, and the cost per equivalent unit of items started and completed this period

A method of product costing in which costs are accumulated and tracked by process and averaged over all products made during the period Correct! Process costing is a method of product costing whereby costs are accumulated and tracked by process or work centers and averaged over all products manufactured during a production period.

What is process costing? -A method of product costing in which costs are accumulated and tracked by process and averaged over all products made during the period -A method of product costing in which costs are accumulated and tracked by specific jobs or products -A method of product costing in which all costs are accumulated and assigned to selling, general, and administrative expenses -A method of product costing in which all costs are accumulated and assigned to manufacturing overhead

Cost of goods manufactured Correct! The definition of cost of goods manufactured is the costs of the completed units that are transferred to finished goods during the period.

What is the name of the cost associated with the completed units? -Cost of goods sold -Cost of goods manufactured -Ending work-in-process inventory -Units started and completed this period

The equivalent units for beginning work-in-process inventory plus the equivalent units for units started and completed plus the equivalent units for ending work-in-process inventory Correct! The equivalent units of production is equal to the equivalent units for beginning work-in-process inventory plus the equivalent units for units started and completed plus the equivalent units for ending work-in-process inventory.

What is the number of equivalent units for direct materials equal to? -The sum of equivalent units for beginning work-in-process inventory and ending work-in-process inventory -The sum of the equivalent units for beginning work-in-process inventory and units started and completed during the current period -The sum of equivalent units for units started and completed and equivalent units for ending inventory -The equivalent units for beginning work-in-process inventory plus the equivalent units for units started and completed plus the equivalent units for ending work-in-process inventory

The equivalent number of units for direct materials is usually different from the equivalent number of units for conversion costs. Correct! The equivalent number of units for direct materials is usually different from the equivalent number of units for conversion costs because direct materials are usually put into production at the beginning of a process, while direct labor and manufacturing overhead are put in throughout production.

What is the relationship between equivalent number of units for direct materials? -The equivalent number of units for direct materials is usually different from the equivalent number of units for conversion costs. -The equivalent number of units for direct labor is usually the same as the equivalent number of units for direct materials. -The equivalent number of units for direct materials is usually the same as the equivalent number of units for conversion costs. -The equivalent number of units for manufacturing overhead is usually the same as the equivalent number of units for direct materials.

It is appropriate when the work performed on each product that goes through various work centers is the same. Correct! Process costing is always appropriate when the work performed on each product that goes through various work centers is the same.

What is true about process costing? -It is always more accurate than job order costing. -It can only be used in manufacturing firms and not in-service firms. -It allows specific product costs to be applied to each product that is made differently. -It is appropriate when the work performed on each product that goes through various work centers is the same.

The costs to complete direct materials in beginning work-in-process inventory are added to the costs to complete conversion of the beginning work-in-process, and the total is added to the total costs of the started and completed inventory for the period. Correct! It is always the direct materials and conversion costs to complete beginning work-in-process inventory that are added to the total costs of the started and completed units that are the total cost of units transferred out.

When computing the costs transferred out of a department or processing center, which of the following is true? -Only the conversion cost of the beginning inventory is added to all costs of the started and completed units to determine the total costs transferred out of the processing center. -Only the costs to complete direct materials and the costs to complete conversion of the beginning work-in-process inventory are added to the conversion costs of the started and completed units. -The costs to complete direct materials in beginning work-in-process inventory are added to the costs to complete conversion of the beginning work-in-process, and the total is added to the total costs of the started and completed inventory for the period. -Only the costs to complete direct materials and the costs to complete conversion of the beginning work-in-process inventory are added to the direct materials costs of the started and completed units.

Separate costs are calculated per unit for direct materials and conversion costs for both beginning work-in-process inventory and current period costs. Correct! Separate unit costs are calculated for direct materials and conversion costs for both beginning work-in-process inventory and conversion costs.

When determining the cost per unit of units produced in a processing center, which statement is true? -Separate costs are calculated per unit for direct materials and conversion costs for both beginning work-in-process inventory and current period costs. -Separate costs are only calculated per unit for direct materials and conversion costs for the beginning work-in-process inventory. -Separate costs are only calculated per unit for direct materials and conversion costs for the current period costs. -Separate costs are not calculated per unit for direct materials or conversion costs for either beginning work-in-process inventory or current period costs.

When a company produces a large volume of products using a series of uniform processes Correct! The appropriate situation in which to use process costing is when a company produces large volumes of products or services using a series of uniform processes

When is it appropriate to use process costing? -When a company produces a large volume of unique items using a series of item-specific processes -When a company produces custom-made products only when an order is received from a customer -When a company produces a small volume of unique items using a series of item-specific processes -When a company produces a large volume of products using a series of uniform processes

Direct materials Correct! No work can be done in a process center until the direct materials are put into the process, so direct materials are usually the first cost included in a processing center.

Which cost would most likely be included first in a process center? -Direct labor -Conversion costs -Direct materials -Manufacturing overhead

Direct labor and manufacturing overhead Correct! The definition of conversion costs is the costs necessary to convert the direct materials to finished goods and includes both direct labor and manufacturing overhead costs.

Which costs are included in conversion costs when using process costing? -Direct materials and direct labor -Direct materials, direct labor, and manufacturing overhead -Direct labor and manufacturing overhead -Direct materials and manufacturing overhead

Direct materials and coversion costs Correct! Direct materials and conversion costs, which are direct labor and manufacturing overhead costs, are costs that make up the work-in-process inventory costs in processing centers.

Which costs make up the work-in-process inventory costs in the processing centers? -Direct labor and manufacturing overhead costs -Direct materials and direct labor costs -Direct materials and manufacturing overhead costs -Direct materials and coversion costs

Direct materials costs Correct! Direct labor and manufacturing overhead costs cannot be incurred until there are direct materials to work on.

Which costs would be introduced into a process costing activity center first? -Manufacturing overhead costs -Conversion costs -Direct labor costs -Direct materials costs

Use of total manufacturing cost and total units of production to assign production costs equally to identical units Correct! Process costing is the use of total manufacturing cost and total units of production to assign production costs equally to identical units.

Which definition summarizes process costing? -Use of total cost of goods sold to assign production costs based on relative selling price -Use of a system that identifies the actual cost of each product produced by assigning the specific costs incurred to make that product -Use of total cost of goods manufactured to assign production costs based on the relative selling price -Use of total manufacturing cost and total units of production to assign production costs equally to identical units

Total production costs are equal to direct materials plus conversion costs. Correct! Direct materials plus conversion costs (direct labor and manufacturing overhead) is the total production cost.

Which description defines total production cost? -Total production costs are equal to direct materials plus conversion costs. -Total production costs are equal to direct labor plus conversion costs. -Total production costs are equal to manufacturing overhead plus conversion costs. -Total production costs are equal to direct materials and direct labor only.

Equivalent units of production Correct! Equivalent units of production is the term used in process costing to measure the actual work performed during the production period.

Which is a measure of the amount of work done during the production period under process costing? -Conversion costs -Equivalent units of production -Direct materials -Equivalent units in beginning inventory

Process costing assigns costs equally to each unit produced during a period. Correct! Process costing assigns costs equally to each unit produced during a period by calculating an average cost per unit and multiplying that average cost by the number of units completed.

Which is a true statement regarding process costing? -In process costing, even though manufacturing companies can specifically identify costs for each product being produced, they find it easier to calculate the average cost of all products. -Process costing assigns costs equally to each unit produced during a period. -The focus of the cost computations in process costing is on the unique job being worked on. -Process costing includes only direct materials and direct labor costs and excludes manufacturing overhead costs when computing the cost of finished goods.

A concrete manufacturer Correct! A concrete manufacturer would make batches of concrete where all units produced are the same and the processes for making the cement is the same.

Which manufacturer should use process costing? -A concrete manufacturer -A company that restores old pioneer wagons -A company that manufacturers roller coasters -A highway bridge builder

A gasoline refinery Correct! A gasoline refinery would always use process costing because each gallon of fuel produced would be the same.

Which manufacturing company should use process costing? -A manufacturer of custom furniture -A gasoline refinery -A manufacturer of engraved t-shirts -A passenger airline manufacturing division

Units started and completed during the period. Correct! Units started and completed during the period are always considered 100% completed and are 100% completed all the time. You cannot call them completed units if they are not completed during the period.

Which of the following are always considered 100% complete when calculating equivalent units? -Units in ending work-in-process conversion costs. -Units in work-in-process for material costs. -Units started and completed during the period. -Units started during the period.

Actual inventory items and the costs of those inventory items Correct! Both the costs and the actual inventory items must be tracked through the process costing system. When the items are 100% complete, the inventory would be transferred to finished goods inventory at the costs that were expended to make the inventory.

Which of the following are transferred from work-in-process to finished goods inventory? -Only the actual inventory items -Neither the actual goods nor the cost of the finished items -Only the cost of the inventory items -Actual inventory items and the costs of those inventory items

The materials cost per equivalent unit during the current period multiplied by the material's equivalent units in the ending work-in-process inventory Correct! The material costs in the ending work-in-process inventory at the end of the current period is calculated by taking the materials cost per equivalent unit during the period and multiplying it by the materials equivalent units in the ending work-in-process inventory.

Which of the following statements calculates the material's costs in the ending work-in-process inventory at the end of the current period? -The sum of the materials and the conversion cost per equivalent units during the prior period multiplied by the material's equivalent units in the ending work-in-process inventory -The sum of the materials and the conversion cost per equivalent units during the current period multiplied by the material's equivalent units in the ending work-in-process inventory -The materials cost per equivalent unit during the current period multiplied by the material's equivalent units in the ending work-in-process inventory -The materials cost per equivalent unit during the prior period multiplied by the material's equivalent units in the ending work-in-process inventory

The sum of the material costs plus the conversion costs for the unfinished units Correct! The cost of the ending work-in-process inventory is calculated by adding the material costs to the conversion costs for the unfinished units.

Which of the following statements summarizes how the cost of the ending work-in-process inventory should be calculated? -The sum of the material costs plus the conversion costs for the finished units -The sum of the material costs for only the unfinished units. -The sum of the material costs plus the conversion costs for the unfinished units -The sum of the material costs plus the conversion costs for the units in beginning work- in-process inventory

Manufacturing bottles of ketchup for sale in grocery stores Correct! Each bottle of ketchup would be the same size, have the same contents, and require the same ingredients. Thus, process costing would be used in this case.

Which products would be produced using the process costing method? -Manufacturing bottles of ketchup for sale in grocery stores -Manufacturing jets for use by commercial airlines -Preparing tax returns for individuals of extremely high net worth -Making custom boats for sale, each with different features

The cost of goods transferred out to finished goods is the sum of the costs to make the finished goods in all processes, both in the current or prior period. Correct! The costs of all work performed on the finished goods, whether in the current or prior periods. From all processes are the costs that are transferred to finished goods inventory.

Which statement accurately describes the cost of goods transferred out? -The cost of goods transferred out to finished goods is the sum of the goods in only one process but not in all periods. -The cost of goods transferred out to finished goods is the sum of the costs to make the finished goods in all processes only in the prior periods. -The cost of goods transferred out to finished goods is the sum of the costs to make the finished goods in all processes only in the current period. -The cost of goods transferred out to finished goods is the sum of the costs to make the finished goods in all processes, both in the current or prior period.

The equivalent number of units is not the same as the number of physical units transferred to finished goods. Correct! The equivalent number of units is a measure of work done on units and almost always differs from the actual number of units. It is a number used to calculate the cost per unit and not the transfer of actual units.

Which statement accurately describes the equivalent number of units? -The equivalent number of units is always the same as the number of physical units transferred to finished goods. -The equivalent number of units is calculated by adding together the physical goods placed in process during the current period with the physical goods in ending inventory. -The equivalent number of units is calculated by adding together the physical goods in beginning inventory to the physical goods placed in process during the current period. -The equivalent number of units is not the same as the number of physical units transferred to finished goods.

The conversion cost per equivalent unit during the current period multiplied by the conversion equivalent units in the ending work-in-process inventory Correct! The conversion costs in the ending work-in-process inventory at the end of the current period is calculated by taking the conversion cost per equivalent unit during the current period and multiplying it by the conversion equivalent units in the ending work-in-process inventory.

Which statement determines the conversion costs in the ending work-in-process inventory at the end of a current period? -The sum of the materials and the conversion cost per equivalent unit during the prior period multiplied by the conversion equivalent units in the ending work-in-process inventory -The conversion cost per equivalent unit during the current period multiplied by the conversion equivalent units in the ending work-in-process inventory -The sum of the materials and the conversion cost per equivalent unit during the current period multiplied by the conversion equivalent units in the ending work-in-process inventory -The conversion cost per equivalent unit during the prior period multiplied by the conversion equivalent units in the ending work-in-process inventory

Work-in-process inventory Correct! Direct materials and conversion costs associated with items started but not finished make up the work-in-process inventory.

Which term is used for direct materials and conversion costs associated with items started but not finished? -Direct labor -Finished goods inventory -Work-in-process inventory -Cost of goods sold

All units in beginning inventory plus all units started and completed this period Correct! The units transferred out come from the beginning inventory and those units started and completed. If units are started but not completed, they stay in ending work-in-process inventory.

Which units are available to be transferred out to finished goods? -All units started and completed and in ending inventory -All units in beginning inventory plus all units started and completed this period -All units in beginning and ending inventory -All units in beginning and ending inventory and started and completed during the period

Because each unit of product produced by the two companies is identical to other products of the same type Correct! Every can of soda product or gallon of gasoline is identical.

Why would a soda company and a gasoline company both primarily use process costing? -Because each of their products consume direct labor and direct materials but no manufacturing overhead -Because each unit of product produced by the two companies is identical to other products of the same type -Because they each only make one product, so process costing is applicable to both companies -Because they are two of the largest companies in the United States, and all big companies use process costing

A large quantity of identical products are being produced. Correct! Process costing is best suited for companies producing a large quantity of identical products.

You have just been hired as the managerial accountant for the Danebor Company. Danebor company makes several products, and you are trying to understand whether process costing or job order costing would be appropriate for each product. You asked the retiring managerial accountant how she decides which product costing method to use. Which response requires the use of process costing as the product costing method? -A small quantity of identical products are being produced. -A large quantity of identical products are being produced. -Individual products that are unique are being produced. -Batches of products that are unique are being produced.