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Exam 20: Process Cost Accounting

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Question 51

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Which of the following characteristics does not usually apply to process manufacturing systems?

A) Each unit of product is separately identifiable.
B) Partially completed products are transferred between processes.
C) Different managers are responsible for different processes.
D) The output of all processes except the final process is an input to the next process.
E) All of these are characteristics of process manufacturing systems.

F) A) and C)
G) B) and D)

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Question 52

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During March, the production department of a process manufacturing system completed a number of units of a product and transferred them to finished goods. Of the units transferred, 25,000 were in process at the beginning of March and 110,000 were started and completed in March. March's beginning inventory units were 100% complete with respect to materials and 55% complete with respect to labor. At the end of March, 30,000 additional units were in process in the production department and were 100% complete with respect to materials and 30% complete with respect to labor. Compute the number of units transferred to finished goods.

A) 110,000.
B) 135,000.
C) 105,000.
D) 165,000.
E) 144,000.

F) None of the above
G) A) and C)

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Question 53

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Process costing is applied to operations with repetitive production and heterogeneous products.

The first step in accounting for production activity in a period, ______________, is a reconciliation of the physical units started in a period with the physical units completed in that period.

In process cost accounting, materials are always classified as indirect if they are not physically incorporated into the final product.

In process costing there is never a balance remaining in Factory Overhead that needs to be closed at period end.

Materials and labor costs that are clearly associated with a specific process are known as _________________. Those costs that are not clearly associated with a specific process are called ______________.

A company that applies process costing is most frequently characterized by:

A company uses the FIFO method for inventory costing. During a period, a production department had 20,000 units in beginning goods in process inventory which were 40% complete; the department completed and transferred 165,000 units. At the end of the period, 22,000 units were in the ending goods in process inventory and are 75% complete. Compute the number of equivalent units produced by the department.

Accountants use the term process cost accounting system because this system uses a number of trained individuals and computers to process the collected cost information.

Embark produces mulch for landscaping use. The following information summarizes production operations for June. The journal entry to record June production activities for direct labor usage is:

In process costing, factory overhead incurred does not usually equal that applied, which yields either ____________________ or ___________________ overhead.

A process cost summary includes the amounts of equivalent units of production for the period.

The fourth step in accounting for production activity in a period is to prepare a cost reconciliation, which reconciles _____________________ with the ___________________.

Job order manufacturing and process manufacturing are two major costing systems used in manufacturing. Briefly contrast the characteristics of these two systems.

An equivalent unit of production is an estimate of efforts that is used to calculate the ______________ of each production component.

The purchase of raw materials on account in a process costing system is recorded with a:

In some circumstances, a process cost accounting system can classify wages paid to maintenance workers as direct labor costs instead of factory overhead.

Refer to the following information about the Dipping Department of the Indiana Factory for the month of August. Indiana Factory uses the FIFO method of inventory costing. The cost per equivalent unit of materials is $10.00, and the cost per equivalent unit of labor and overhead is $22.00. Compute the cost that should be assigned all units that were completed and transferred during August.

Process cost accounting systems are commonly used by companies that produce a large volume of standardized units on a continuous basis.