Chapter 4 Quiz Flashcards
In process costing, the equivalent units computed for materials is generally the same as that computed for conversion costs. True or False?
False
The following journal entry would be made in a processing costing system when units that have been completed in the final processing department are transferred to the finished goods warehouse:
Dr. Finished Goods
Cr. Materials
True or False?
False
In calculating cost per equivalent unit under the weighted-average method, prior period costs are combined with current period costs. 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
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
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
A job-order costing system would be best suited for production of a large quantity of a homogenous product. 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 or False?
True
In the cost reconciliation report under the weighted-average method, the “Cost to be accounted for” section contains which of the following items?
A) Cost of beginning work in process inventory
B) Cost of ending work in process inventory
C) Cost of units transferred out
D) Cost of ending finished goods inventory.
Cost of beginning work in process inventory.
Which of the following types of companies would typically use process costing rather than job-order costing?
A) A small appliance repair shop.
B) A manufacturer of commercial passenger aircraft.
C) A specialty equipment manufacturer.
D) A breakfast cereal manufacturer.
A breakfast cereal manufacturer.
When computing the cost per equivalent unit, the weighted-average method of process costing considers:
A) Cost incurred during the current period only.
B) Costs incurred during the current period plus cost of ending work in process inventory.
C) Costs incurred during the current period plus cost of beginning work in process inventory.
D) Costs incurred during the current period less cost of beginning work in process inventory.
Costs incurred during the current period plus cost of beginning work in process inventory.
Which of the following journal entries properly records the use of $7,000 of raw materials in the Formulating Department?
A) Dr. Raw Materials for $7,000
Cr. Finished Goods- Formulating for $7,000
B) Dr. Finished Goods- Formulating for $7,000
Cr. Raw Materials for $7,000
C) Dr. Raw Materials for $7,000
Cr. Work in Process- Formulating for $7,000
D) Dr. Work in Process- Formulating for $7,000
Cr. Raw Materials for $7,000
Dr. Work in Process- Formulating for $7,000
Cr. Raw Materials for $7,000
Which of the following journal entries properly records direct labor costs (on account) of $7,000 incurred in the Formulating Department?
A) Dr. Salaries and Wages Payable for $7,000
Cr. Finished Goods- Formulating for $7,000
B) Dr. Finished Goods- Formulating for $7,000
Cr. Salaries and Wages Payable for $7,000
C) Dr. Work in Process- Formulating for $7,000
Cr. Salaries and Wages Payable for $7,000
D) Dr. Salaries and Wages Payable for $7,000
Cr. Work in Process- Formulating for $7,000
Dr. Work in Process- Formulating for $7,000
Cr. Salaries and Wages Payable for $7,000
Conversion costs include:
A) Direct materials cost and indirect materials cost.
B) Direct materials cost and manufacturing overhead cost.
C) Direct materials cost and direct labor cost.
D) Direct labor cost and manufacturing overhead cost.
Direct labor cost and manufacturing overhead cost.
The equation for computing equivalent units is:
A) [1- (Number of partially completed units x Percentage completion)]
B) [1 - (Number of partially completed units/ Percentage completion)]
C) Number of partially completed units x Percentage completion
D) Number of partially completed units/Percentage completion
Number of partially completed units x Percentage completion
Which of the following journal entries properly records the transfer of $7,000 of manufacturing costs from the Formulating Department to the Bottling Department?
A) Dr. Work in Process- Formulating for $7,000
Cr. Work in Process- Bottling for $7,000
B) Dr. Work in Process- Bottling for $7,000
Cr. Work in Process- Formulating for $7,000
C) Dr. Work in Process- Formulating for $7,000
Cr. Finished Goods for $7,000
D) Dr. Finished Goods for $7,000
Cr. Work in Process- Formulating for $7,000
Dr. Work in Process- Bottling for $7,000
Cr. Work in Process- Formulating for $7,000
Which of the following journal entries properly records overhead applied of $7,000 in the Formulating Department?
A) Dr. Work in Process- Formulating
Cr. Manufacturing Overhead
B) Dr. Finished Goods- Formulating
Cr. Manufacturing Overhead
C) Dr. Manufacturing Overhead
Cr. Finished Goods- Formulating
D) Dr. Manufacturing Overhead
Cr. Work in Process- Formulating
Dr. Work in Process- Formulating
Cr. Manufacturing Overhead
Which of the following journal entries properly records the transfer of $7,000 of manufacturing costs from the Bottling Department to Finished Goods?
A) Dr. Finished Goods
Cr. Work in Process- Bottling
B) Dr. Cost of Goods Sold
Cr. Work in Process- Bottling
C) Dr. Work in Process- Bottling
Cr. Finished Goods
D) Dr. Work in Process- Bottling
Cr. Cost of Goods Sold
Dr. Finished Goods
Cr. Work in Process- Bottling
Which of the following journal entries properly records the transfer of $7,000 of manufacturing costs incurred to fulfill orders that have ben completed and shipped to customers?
A) Dr. Finished Goods
Cr. Cost of Goods Sold
B) Dr. Cost of Goods Sold
Cr. Finished Goods
C) Dr. Sales
Cr. Finished Goods
D) Dr. Finished Goods
Cr. Sales
Dr. Cost of Goods Sold
Cr. Finished Goods
Which of the following statements is false with respect to job-order costing and process costing?
A) Both systems assign materials, labor, and manufacturing overhead costs to products.
B) Both systems compute unit product costs by department
C) Both systems use the same basic manufacturing accounts, including Manufacturing Overhead, Raw Materials, Work in Process, and Finished Goods.
D) The flow of costs through the manufacturing accounts is basically the same in both systems.
Both systems compute unit product costs by department.
In the cost reconciliation report under the weighted-average method, the “Total cost accounted for” equals:
A) Cost of ending work in process inventory + Cost added to production during the period.
B) Cost of beginning work in process inventory + Cost of units transferred in.
C) Cost of beginning work in process inventory + Cost of units transferred out.
D) Cost of ending work in process inventory + Cost of units transferred out.
Cost of ending work in process inventory + Cost of units transferred out.
A process costing system is employed in those situations where:
A) Full or absorption cost approach is not employed.
B) Many different products, jobs, or batches of production are being produced each period.
C) Manufacturing involves a single, homogenous product that flows evenly through the production process on a continuous basis.
D) A service is performed such as in a law firm or an accounting firm.
Manufacturing involves a single, homogenous product that flows evenly through the production process on a continuous basis.
Which of the following is true regarding the weighted-average method of process costing?
A) It calculates unit costs based solely on the costs and outputs from the current period.
B) It calculates unit costs by combining the manufacturing and nonmanufacturing costs incurred in specific departments.
C) It calculates unit costs by combining costs and outputs from the current and prior periods.
D) It excludes equivalent units of production from the unit cost calculations.
It calculates unit costs by combining costs and outputs from the current and prior periods.
