# Cost Accounting Chapter 8

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Multiple Choice Questions

### 21. Which of the following statements is (are) true regarding product costing? (A) Twenty cans of paint that are 25% full are equivalent to four cans of paint that are completely full. (B) The equivalent unit concept refers to the actual amount of work during the period stated in terms of whole units. A. Only A is true. B. Only B is true. C. Both A and B are true. D. Neither A nor B is true.

B. Only B is true.

### 22. Which of the following organizations would most likely use a process costing system? A. Gasoline refinery B. Automobile retailer C. Airplane manufacturer D. Public accounting firm

A. Gasoline refinery

C. c

### 24. An equivalent unit of conversion costs is equal to the amount of conversion costs required to A. start a unit. B. start and complete a unit. C. transfer a unit in. D. transfer a unit out.

B. start and complete a unit.

### 25. Of the following process costing steps, which must be done last? A. Compute the equivalent units of production. B. Compute the costs per equivalent unit of production. C. Measure the physical flow of resources. D. Identify the product costs to account for.

B. Compute the costs per equivalent unit of production.

### 26. If the units in the beginning Work-in-Process Inventory are greater than the units in the ending Work-in-Process Inventory, then the units transferred out are A. more than the units started during the period. B. equal to the equivalent units of production. C. less than the units started during the period. D. equal to the actual work done during the period.

A. more than the units started during the period.

### 27. Which of the following statements concerning a process cost accounting system is false? A. The units in beginning inventory plus the units transferred out during the month should equal the units in the ending inventory plus the units transferred in during the month. B. If material is used evenly throughout a process, the number of equivalent material units will equal the number of equivalent units for the conversion (processing) costs. C. Actual costing may be used in a process costing system to assign indirect overhead costs to departments. D. The units in beginning inventory plus the units transferred in during the month should equal the units in the ending inventory plus the units transferred out during the month.

A. The units in beginning inventory plus the units transferred out during the month should equal the units in the ending inventory plus the units transferred in during the month.

### 28. In the computation of the manufacturing cost per equivalent unit, the weighted average method of process costing considers A. current costs only. B. current costs plus cost of beginning Work-in-Process Inventory. C. current costs plus cost of ending Work-in-Process Inventory. D. current costs less cost of beginning Work-in-Process Inventory.

B. current costs plus cost of beginning Work-in-Process Inventory.

### 29. In order to compute equivalent units of production using the FIFO method of process costing, work for the period must be broken down to units A. completed during the period and units in ending inventory. B. started during the period and units transferred out during the period. C. completed from beginning inventory, started and completed during the month, and units in ending inventory. D. processed during the period and units completed during the period.

C. completed from beginning inventory, started and completed during the month, and units in ending inventory.

### 30. Blue Company has beginning and ending Work-in-Process Inventories that are 45% and 10% complete, respectively. Materials are added at the beginning of the process. If first-in, first-out (FIFO) process costing is used, the total equivalent units for materials will equal the number of units A. transferred out during the period. B. started and completed during the period. C. started into the process during the period. D. started into the process plus the units in the ending inventory.

C. started into the process during the period.

### 31. Red Company had Work-in-Process Inventories that were 45% complete at the start of the month. Work-in-Process at the end of the month was 10% complete. Materials were added at the beginning of the process. If weighted-average process costing is used, the total equivalent units for materials will equal the number of units A. transferred out during the period. B. started and completed during the period. C. started into the process during the period. D. transferred out during the process plus the units in the ending inventory.

D. transferred out during the process plus the units in the ending inventory.

### 32. A form prepared periodically for each processing department summarizing (1) the units for which the department is accountable and the disposition of these units and (2) the costs charged to the department and the allocation of these costs is called a A. schedule of Cost of Goods Manufactured. B. production cost report. C. job order cost sheet. D. schedule for Cost of Goods Sold.

B. production cost report.

### 33. Materials are added at the beginning of a process in a process costing system. The beginning Work-in-Process Inventory was 30% complete as to conversion costs. Using first-in, first-out (FIFO) process costing, the total equivalent units for material are A. beginning inventory this period for this process. B. units started this period in this process. C. units started this period in this process plus the beginning inventory. D. units started this period in this process plus 70% of the beginning inventory this period.

B. units started this period in this process.

### 34. An error was made by ROC Company in computing the percentage-of-completion of the current year's ending Work-in-Process Inventory. The error resulted in the assignment of a lower percentage of completion to each component of the inventory than actually was the case. There was no beginning Work-in-Process Inventory. What is the effect of this error on (1) cost assigned to cost of goods completed for the period and (2) the computation of costs per equivalent unit? 1 2 A. Understated Understated B. Understated Overstated C. Overstated Understated D. Overstated Overstated

D. Overstated Overstated

A. A only.

### 36. In a production-cost report using process costing, transferred-in costs are most similar to A. material added at the beginning of the process. B. conversion costs added during the process. C. costs transferred-out to the next process. D. costs included in beginning inventory.

A. material added at the beginning of the process.

### 37. Additional materials are added in the second department of a four-department production process. However, this addition does not increase the number of units being produced in the second department, but will A. increase the equivalent units of production. B. increase the total cost per unit. C. decrease the value of the transferred-in costs. D. decrease the total costs to account for.

B. increase the total cost per unit.

### 38. Under which of the following conditions will the FIFO method produce the same cost of goods manufactured as the weighted-average method? A. There is no ending inventory. B. There is no beginning inventory. C. The beginning and ending inventories are equal. D. The beginning and ending inventories are both 50% complete.

B. There is no beginning inventory.

A. I only.

### 40. Which of the following statements is (are) false? (A) Operations costing accounts for material costs like job costing and conversion costs like process costing. (B) An automobile manufacturer is more likely to use an operations costing system than a process costing system. A. A only. B. B only. C. Both A and B. D. Neither A nor B.

D. Neither A nor B.

### 41. Operations costing systems are used when the products have A. used a standardized method that is repeatedly performed. B. common characteristics and no individual characteristics. C. individual characteristics and no common characteristics. D. been mass produced in a continuous production process. E. some common characteristics and some individual characteristics.

E. some common characteristics and some individual characteristics.

### 42. An operations costing system is A. identical to a process costing system except that actual cost is used for manufacturing overhead. B. the same as a process costing system except that materials are allocated on the basis of batches of production. C. the same as a job order costing system except that materials are accounted for in the same way as they are in a process costing system. D. the same as a job order costing system except that no overhead allocations are made since actual costs are used throughout. E. a system in which manufacturing activities are finely divided into individual, discrete steps or operations.

B. the same as a process costing system except that materials are allocated on the basis of batches of production.

### 43. Predetermined manufacturing overhead rates can be used in all of the following costing systems except A. job costing. B. process costing. C. operations costing. D. actual costing.

D. actual costing.

C. 5,100.

C. 66,000

B. 56,000

D. 131,000

D. 50,000

C. 48,000

D. 1,200 units.

C. c

B. \$2,900

B. \$53,600

C. 36,500

C. \$13.17

B. \$14,950

B. b

D. 20,000.

B. 17,000.

D. \$1.76.

B. \$2.20

A. \$63,360.

C. \$9,240.

C. 18,000

B. 13,000

C. 14,000

D. 17,100

B. \$17,600

D. 6,400

C. \$2.00

B. \$2.50

D. \$2.60

B. \$16,000

B. \$1,600

A. a

D. d

### 77. In a process costing system, the application of factory overhead usually would be recorded as an increase in: (CPA adapted) A. Finished goods inventory control B. Factory overhead control C. Cost of goods sold D. Work-in-process inventory control

D. Work-in-process inventory control

A. 150

D. \$0.43

### 80. In computing the current period's manufacturing cost per equivalent unit, the FIFO method of process costing considers: (CPA adapted) A. only current period costs. B. current period costs plus cost of beginning work-in-process inventory C. current period costs less cost of beginning work-in-process inventory D. current period costs plus the cost of ending work-in-process inventory

A. only current period costs.

B. \$4.50

B. \$5.83

A. \$153,168

C. \$4.60

C. \$6.00

E. \$156,960

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