Firms should use a process costing system when they produce products that:
  • assigning costs to the firm's inventory
  • actual overhead exceeded applied overhead.
  • Homogeneous product and high production volume.
  • Pass through a series of manufacturing processes.
At the beginning of the recent period, there were 1,020 units of product in a department, one-third completed. These units were finished and an additional 5,500 units were started and completed during the period. 840 units were still in process at the end of the period, one-fourth completed. Using the weighted-average valuation method, the equivalent units produced by the department were:
  • 100,00088,000 + (36,000)(1 / 3) = 100,000
  • 8,460 units.
  • 11,44010,800 + (800 × .8) = 11,440
  • 6,730 units.6,520 + (840 × ¼) = 6,730
A company's beginning work in process inventory consisted of 22,000 units that were 1/5 complete with respect to direct labor. These beginning units were completed and another 102,000 units were started during the current period. Of those started, 66,000 were finished and the remaining 36,000 were one-third complete at the end of the period. Using the weighted-average method, the equivalent units of production were:
  • 11,44010,800 + (800 × .8) = 11,440
  • 6,730 units.6,520 + (840 × ¼) = 6,730
  • 100,00088,000 + (36,000)(1 / 3) = 100,000
  • Homogeneous product and high production volume.
Equivalent units of production are equal to:
  • is a pool of indirect production costs that must somehow be attached to each unit manufactured.
  • The number of units that could have been completed if all effort had been applied to units that were started and completed that period.
  • Raw Material Inventory 125,0000 Cash 125,000Goods In Process Inventory 75,000Factory Overhead 30,000 Raw Materials Inventory 105,000
  • The percentage of completion.
A department had 21,500 units that were 20% complete in beginning Goods in Process Inventory. During the current period 103,200 units were transferred in. Ending Goods in Process Inventory was 25,800 units that were 70% complete. Assume this company uses the weighted-average method of process costing and direct material is added uniformly throughout the process. What are the equivalent units produced with respect to direct material?
  • 8,460 units.
  • 100,00088,000 + (36,000)(1 / 3) = 100,000
  • 116,960Units Completed and Transferred Out = Beginning Inventory + Units Transferred In − Ending Inventory.Units Completed and Transferred Out = 21,500 + 103,200 − 25,800 = 98,900Equivalent Units = 98,900 + (25,800)(0.70) = 116,960
  • 11,44010,800 + (800 × .8) = 11,440
Sting Corporation debited Cost of Goods Sold and credited Manufacturing Overhead at year-end. On the basis of this information, one can conclude that:
  • actual overhead exceeded applied overhead.
  • There may be over or underapplied overhead.
  • 11,44010,800 + (800 × .8) = 11,440
  • Pass through a series of manufacturing processes.
Direct material costs are recorded:
  • Pass through a series of manufacturing processes.
  • Directly to a Goods in Process account.
  • There may be over or underapplied overhead.
  • assigning costs to the firm's inventory
Product costing in a manufacturing firm is the process of:
  • Directly to a Goods in Process account.
  • Homogeneous product and high production volume.
  • assigning costs to the firm's inventory
  • There may be over or underapplied overhead.
Which of the following companies would be most likely to use a process costing system?
  • Equivalent units of production.
  • The percentage of completion.
  • Raw Material Inventory 125,0000 Cash 125,000Goods In Process Inventory 75,000Factory Overhead 30,000 Raw Materials Inventory 105,000
  • Oil Refinery
Which of the following pair of journal entries correctly records the current month's activity where $125,000 of raw material was purchased for cash, and $75,000 of direct material and $30,000 of indirect materials were used in the production process?
  • Equivalent units of production.
  • The number of units that could have been completed if all effort had been applied to units that were started and completed that period.
  • Raw Material Inventory 125,0000 Cash 125,000Goods In Process Inventory 75,000Factory Overhead 30,000 Raw Materials Inventory 105,000
  • Oil Refinery
To compute an equivalent unit of production, one must be able to reasonably estimate:
  • Homogeneous product and high production volume.
  • The percentage of completion.
  • Equivalent units of production.
  • There may be over or underapplied overhead.
A typical job-cost record would provide information about all of the following items related to an order except:
  • Oil Refinery
  • administrative costs
  • Equivalent units of production.
  • The percentage of completion.
Manufacturing overhead:
  • Raw Material Inventory 125,0000 Cash 125,000Goods In Process Inventory 75,000Factory Overhead 30,000 Raw Materials Inventory 105,000
  • The number of units that could have been completed if all effort had been applied to units that were started and completed that period.
  • is a pool of indirect production costs that must somehow be attached to each unit manufactured.
  • assigning costs to the firm's inventory
Which of the following characteristics applies to process cost accounting and not to job order cost accounting?
  • The percentage of completion.
  • Raw Material Inventory 125,0000 Cash 125,000Goods In Process Inventory 75,000Factory Overhead 30,000 Raw Materials Inventory 105,000
  • Equivalent units of production.
  • Oil Refinery
A company that applies process costing is most frequently characterized by:
  • 100,00088,000 + (36,000)(1 / 3) = 100,000
  • Pass through a series of manufacturing processes.
  • Homogeneous product and high production volume.
  • The percentage of completion.
Which of the following costs are not included in finished goods inventory?
  • receiving report
  • lawn fertilizer manufacturer
  • swimming pool installer
  • chief financial officer's salary
The document authorizing the issuance of materials from the storeroom is a
  • swimming pool installer
  • materials requisition
  • time tickets
  • graduation invitation
The details concerning the costs incurred on each job order are accumulated in a work in process account and supported by a
  • False
  • time tickets
  • time ticket
  • cost ledger
Which of the following are the two main types of cost accounting systems for manufacturing operations?
  • job order cost and process cost systems
  • job order cost system
  • swimming pool installer
  • lawn fertilizer manufacturer
Which of the following products would be manufactured using a job order costing system?
  • graduation invitation
  • time tickets
  • lawn fertilizer manufacturer
  • swimming pool installer
Which of the following is a product cost?
  • swimming pool installer
  • drill bits for a drill press used in the plant assembly area
  • lawn fertilizer manufacturer
  • graduation invitation
Which of the following would most likely use a job order costing system?
  • graduation invitation
  • swimming pool installer
  • time tickets
  • lawn fertilizer manufacturer
Which of the following systems provides for a separate record of the cost of each particular quantity of product that passes through the factory?
  • job order cost and process cost systems
  • swimming pool installer
  • job order cost system
  • graduation invitation
The basis for recording direct and indirect labor costs incurred is a summary of the period's
  • time ticket
  • a paper mill
  • time tickets
  • cost ledger
Which of the following would record the labor costs to an individual job?
  • time tickets
  • lawn fertilizer manufacturer
  • swimming pool installer
  • time ticket
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