Q&A Hero

Q: What is a hybrid costing system? When is a hybrid costing system appropriate for a manufacturer?

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

Q: Briefly explain the conditions under which job order cost accounting systems and process cost accounting systems are commonly applied.

Q: Why is the Process Cost Summary important to management and how does the Process Cost Summary accomplish its purposes?

Q: What are the four steps in accounting for production activity in a period?

Q: What is meant by equivalent units of production, and why are they important when a process cost accounting system is used?

Q: Match the following terms with the definitions. __________ (1) Equivalent units of production __________ (2) Job order cost accounting system __________ (3) Hybrid manufacturing system __________ (4) Process manufacturing system __________ (5) Process cost accounting system __________ (6) Materials consumption report __________ (7) Process cost summary A. Costing system to determine the cost of producing each job or job lot. B. Document that summarizes the materials a department uses during a reporting period; replaces materials requisition. C. Report of costs charged to a department, its equivalent units of production achieved, even the costs assigned to its output. D. A manufacturing system that contains features of both process and job order systems. E. Number of units that would be completed if all effort during a period had been applied to units that were started and finished. F. System of assigning direct materials, direct labor, and overhead to specific processes; total costs associated with each process are then divided by the number of units passing through that process to determine cost per equivalent unit. G. Process of products in a continuous flow of steps.

Q: A company uses the weighted-average method for inventory costing. At the end of the period, 22,000 units were in the ending goods in process inventory and are 100% complete for materials and 75% complete for labor and overhead. The equivalent costs per unit are; materials, $2.65, labor, $2.15, and overhead, $3.20. Compute the cost that would be assigned to the ending goods in process inventory for the period. A. $146,575. B. $176,000. C. $87,725. D. $93,775. E. $132,000.

Q: 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. All of these are with respect to labor. The production department had labor costs in the beginning goods is process inventory of $99,000 and total labor costs added during the period are $726,825. Compute the equivalent cost per unit for labor. A. $4.40. B. $4.76. C. $4.19. D. $4.55. E. $4.61.

Q: A company uses the weighted average 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. All of these are with respect to labor. The production department had labor costs in the beginning goods is process inventory of $99,000 and total labor costs added during the period are $726,825. Compute the equivalent cost per unit for labor. A. $4.40. B. $4.76. C. $4.19. D. $4.55. E. $4.61.

Q: 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. A. 181,500. B. 165,000. C. 173,500. D. 145,000. E. 187,000.

Q: A company uses the weighted average 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. A. 181,500. B. 165,000. C. 173,500. D. 145,000. E. 187,000.

Q: 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. Marchs 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 equivalent units with respect to both materials and direct labor respectively for March using the FIFO method. A. 165,000; 165,000. B. 135,000; 119,000. C. 140,000; 130,250. D. 165,000; 144,000. E. 144,000; 144,000.

Q: 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. Marchs 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. The production department incurred direct labor cost of $578,900 and its beginning inventory included labor cost of $54,700. Compute the direct labor cost per equivalent unit for the department using the weighted-average method. A. $4.69. B. $3.84. C. $4.86. D. $4.28. E. $4.40.

Q: 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. Marchs 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. The production department incurred direct materials cost of $253,000 and its beginning inventory included materials cost of $93,500. Compute the direct materials cost per equivalent unit for the department using the weighted-average method. A. $1.53. B. $2.48. C. $2.10. D. $2.57. E. $2.40.

Q: 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. Marchs 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 equivalent units with respect to both materials and direct labor respectively for March using the weighted-average method. A. 165,000; 165,000. B. 135,000; 119,000. C. 140,000; 130,250. D. 165,000; 144,000. E. 144,000; 144,000.

Q: 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. Marchs 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.

Q: Embark produces mulch for landscaping use. The following information summarizes production operations and sales activities for June. The journal entry to record June sales is: Direct materials used $87,000 Direct labor used 160,000 Predetermined overhead rate (based on direct labor) 155% Goods transferred to finished goods 432,000 Cost of goods sold 444,000 Credit sales 810,000 A. Debit Accounts Receivable $810,000; credit Cost of Goods Sold $810,000. B. Debit Accounts Receivable $810,000; credit Sales $366,000; credit Finished Goods Inventory $444,000. C. Debit Cost of Goods Sold $444,000; credit Sales $444,000. D. Debit Finished Goods Inventory $444,000; debit Sales $810,000; credit Accounts Receivable $810,000; credit Cost of Goods Sold $444,000. E. Debit Accounts Receivable $810,000; credit Sales $810,000; debit Cost of Goods Sold $444,000; credit Finished Goods Inventory $444,000.

Q: Embark produces mulch for landscaping use. The following information summarizes production operations for June. The journal entry to record June production activities for goods transfer from production to finished goods is: Direct materials used $87,000 Direct labor used 160,000 Predetermined overhead rate (based on direct labor) 155% Goods transferred to finished goods 432,000 Cost of goods sold 444,000 Credit sales 810,000 A. Debit Finished Goods Inventory $432,000; credit Goods in Process Inventory $432,000. B. Debit Goods in Process Inventory $444,000; credit Finished Goods Inventory $444,000. C. Debit Goods in Process Inventory $432,000; credit Finished Goods Inventory $432,000. D. Debit Finished Goods Inventory $444,000; credit Goods in Process Inventory $444,000. E. Debit Goods in Process Inventory $432,000; credit Cash $432,000.

Q: Embark produces mulch for landscaping use. The following information summarizes production operations for June. The journal entry to record June production activities for overhead allocation is: Direct materials used $87,000 Direct labor used 160,000 Predetermined overhead rate (based on direct labor) 155% Goods transferred to finished goods 432,000 Cost of goods sold 444,000 Credit sales 810,000 A. Debit Factory Overhead $248,000; credit Cash $248,000. B. Debit Goods in Process Inventory $160,000; credit Factory Payroll $160,000. C. Debit Goods in Process Inventory $248,000; credit Factory Overhead $248,000. D. Debit Goods in Process Inventory $160,000; credit Factory Overhead $160,000. E. Debit Goods in Process Inventory $160,000; credit Cash $160,000.

Q: 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: Direct materials used $87,000 Direct labor used 160,000 Predetermined overhead rate (based on direct labor) 155% Goods transferred to finished goods 432,000 Cost of goods sold 444,000 Credit sales 810,000 A. Debit Factory Payroll $160,000; credit Cash $160,000. B. Debit Goods in Process Inventory $160,000; credit Factory Payroll $160,000. C. Debit Cost of Goods Sold $160,000; credit Factory Payroll $160,000. D. Debit Goods in Process Inventory $160,000; credit Raw Materials Inventory $160,000. E. Debit Goods in Process Inventory $160,000; credit Cash $160,000.

Q: Embark produces mulch for landscaping use. The following information summarizes production operations for June. The journal entry to record June production activities for direct material usage is: Direct materials used $87,000 Direct labor used 160,000 Predetermined overhead rate (based on direct labor) 155% Goods transferred to finished goods 432,000 Cost of goods sold 444,000 Credit sales 810,000 A. Debit Raw Materials Inventory $87,000; credit Accounts Payable $87,000. B. Debit Raw Materials Inventory $87,000; credit Finished Goods Inventory $87,000. C. Debit Cost of Goods Sold $87,000; credit Finished Goods Inventory $87,000. D. Debit Goods in Process Inventory $87,000; credit Raw Materials Inventory $87,000. E. Debit Goods in Process Inventory $87,000; credit Cost of Goods Sold $87,000.

Q: Que Corporation uses a process cost accounting system. The company manufactured certain goods at a cost of $800 and sold them on credit to Are Corporation for $1,075. The complete journal entry to be made by Que at the time of this sale is: A. Debit Accounts Receivable $1,075; credit Sales $1,075; debit Cost of Goods Sold $800; credit Finished Goods Inventory $800. B. Debit Accounts Receivable $1,075; credit Sales $275; credit Finished Goods Inventory $800. C. Debit Cost of Goods Sold $1,075; credit Sales $1,075. D. Debit Finished Goods Inventory $800; debit Sales $1,075; credit Accounts Receivable $1,075; credit Cost of Goods Sold $800. E. Debit Accounts Receivable $1,075; debit Selling expense $800; credit Sales $1,075; credit Cost of Goods Sold $800.

Q: The following is an account for a production department, showing its costs for one month: Goods in Process Inventory Balance 5,400 Direct materials 21,600 Direct labor 16,200 Overhead 10,800 Assume that materials are added at the beginning of the production process and that direct labor and overhead are applied uniformly. If the units in ending goods in process inventory cost $4,590, and the started and completed units cost $41,850, what was the cost of completing the units in the beginning goods in process inventory? A. $12,150. B. $ 2,160. C. $ 7,560. D. $54,000. E. $37,260.

Q: To compute equivalent units of production, one must be able to reasonably estimate: A. The percentage of completion. B. Units completed. C. Units started and completed. D. Direct labor cost. E. Materials cost.

Q: In a process costing system, when manufacturing overhead costs are applied to the cost of production, they are debited to: A. the Finished Goods Inventory account. B. the Cost of Goods Sold account. C. the Goods in Process Inventory account. D. the Manufacturing Overhead account. E. the Raw Materials Inventory account.

Q: After posting all actual factory overhead and applying factory overhead to production departments in a process costing system, A. There will never be underapplied overhead. B. There will never be overapplied overhead. C. There will always be underapplied overhead. D. There will always be overapplied overhead. E. There may be over or underapplied overhead.

Q: In a process operation, the direct labor of a production department includes: A. All labor used exclusively by that department, even if the labor is not applied to the product itself. B. All labor used exclusively by that department, but only if the labor is applied to the product itself. C. All labor for that department, including labor for services that help more than one production department, such as clerical, repair, and computer technicians. D. Only labor that helps more than one production department, such as clerical, repair, and computer technicians. E. Only that labor that is recorded in the Factory Payroll account.

Q: Direct labor and indirect labor are recorded, respectively, to: A. Factory Overhead and Goods in Process Inventory. B. Goods in Process Inventory and Finished Goods Inventory. C. Finished Goods Inventory and Goods in Process Inventory. D. Goods in Process Inventory and Factory Overhead. E. Cost of Goods Sold and Finished Goods Inventory.

Q: When raw materials are purchased on account for use in a process costing system, the corresponding journal entry that should be recorded will include: A. A debit to Goods in Process Inventory. B. A debit to Accounts Payable. C. A credit to Cash. D. A debit to Raw Materials Inventory. E. A credit to Raw Materials Inventory.

Q: The purchase of raw materials on account in a process costing system is recorded with a: A. Debit to Purchases and credit to Cash. B. Debit to Purchases and a credit to Accounts Payable. C. Debit to Raw Materials Inventory and a credit to Accounts Payable. D. Debit to Accounts Payable and a credit to Raw Materials Inventory. E. Debit to Goods in Process Inventory and a credit to Accounts Payable.

Q: In a process cost accounting system, direct material costs incurred are recorded: A. Indirectly to a Goods in Process Inventory account. B. Indirectly to a Finished Goods Inventory account. C. Directly to a Goods in Process Inventory account. D. Directly to a Finished Goods Inventory account. E. Directly to a Cost of Goods Sold account.

Q: A hybrid costing system would be most appropriate when: A. A manufacturer is able to standardize processes while at the same time attempting to meet individual customer needs. B. Large quantities of identical products are being produced. C. The volume of production is low and costs are high. D. There is no standardization of units of production. E. All of the choices would necessitate a hybrid costing system.

Q: An organizational unit of a factory that has the responsibility for partially manufacturing or producing a product is called a: A. Production department. B. Service department. C. Primary department. D. Responsibility department. E. Control department.

Q: A company that applies process costing is most frequently characterized by: A. Low standardization and high production volume. B. Custom orders and homogeneous products. C. Repetitive production and heterogeneous products. D. Repetitive production and low production volume. E. Homogeneous product and high production volume.

Q: A system of accounting in which the costs of each process are accumulated and then assigned to the units of product that passed through the process is a: A. General cost accounting system. B. Process cost accounting system. C. Job order cost accounting system. D. Manufacturing cost accounting system. E. Goods in process accounting system.

Q: The following data are available for a company's manufacturing activities: Beginning goods in process inventory.................................................................... 5,000 units, 1/4 of the labor added this period Units started and completed ............................................................ . 15,000 Ending goods in process inventory .................................................................... 6,000 units, 1/2 of the labor added this period If materials are added when the production process begins and direct labor is applied uniformly throughout the process, what are the equivalent units for direct materials and for direct labor, respectively using the FIFO method of process costing? A. 16,250; 19,250. B. 16,250; 21,750. C. 21,000; 19,250. D. 19,250; 18,750. E. 21,000; 22,250.

Q: Aniston Enterprises manufactures stylish hats for sophisticated women. All materials are introduced at the beginning of the manufacturing process in the Cutting Department. Conversion costs are incurred uniformly throughout the manufacturing process. As the cutting of material is completed, the pieces are immediately transferred to the Sewing Department. Information for the Cutting Department for the month of May follows. Goods in Process, May 1 (50,000 units, 100% complete for direct materials, 40% complete with respect to direct labor and overhead; includes $70,500 of direct material cost; $34,050 of conversion costs). Units started in May 225,000 Units completed in May 200,000 Goods in Process, May 31 (75,000 units, 100% complete for direct materials; 20% complete for conversion costs). Costs incurred in May Direct materials $342,000 Conversion costs $352,950 If Aniston Enterprises uses the FIFO method of process costing, compute the equivalent units for materials and conversion costs respectively for May. A. 225,000; 225,000. B. 200,000; 195,000 C. 275,000; 200,000 D. 225,000; 195,000 E. 200,000; 200,000

Q: Aniston Enterprises manufactures stylish hats for sophisticated women. All materials are introduced at the beginning of the manufacturing process in the Cutting Department. Conversion costs are incurred uniformly throughout the manufacturing process. As the cutting of material is completed, the pieces are immediately transferred to the Sewing Department. Information for the Cutting Department for the month of May follows. Goods in Process, May 1 (50,000 units, 100% complete for direct materials, 40% complete with respect to direct labor and overhead (conversion costs); includes $70,500 of direct material cost; $34,050 of conversion costs). Units started in May 225,000 Units completed in May 200,000 Goods in Process, May 31 (75,000 units, 100% complete for direct materials; 20% complete for conversion costs). Costs incurred in May Direct materials $342,000 Conversion costs $352,950 If Aniston Enterprises uses the FIFO method of process costing, compute the cost per equivalent unit for direct materials and conversion costs respectively for May. A. $1.52; $1.81. B. $1.50; $1.76. C. $1.83; $1.72. D. $1.71; $1.81. E. $3.30; $3.30.

Q: A process cost summary is a managerial accounting report that describes: A. The costs charged to a department. B. The equivalent units of production by the department. C. How the costs were assigned to the output. D. Physical transfers for a department. E. All of the options are correct.

Q: A company uses a process cost accounting system. Its Sewing Department completed and transferred out 120,000 units during the current period. The ending inventory in the Sewing Department consists of 40,000 units (20% complete with respect to direct materials and 60% complete with respect to direct labor). Overhead is applied on the basis of direct labor. Determine the equivalent units of production for the Sewing Department for direct materials, direct labor and overhead assuming the weighted average method. A. 120,000; 120,000; 120,000 B. 120,000; 160,000; 120,000 C. 128,000; 120,000; 120,000 D. 128,000; 144,000; 144,000 E. 128,000; 184,000; 160,000

Q: Medina Corp. uses the weighted average method for inventory costs and had the following information available for the year. Equivalent units of production for the year are: Beginning inventory of goods in process (40% complete, $1,100) 200 units Ending inventory of goods in process (80% complete).. 400 units Total units started during the year.. 3,200 units A. 3,200 units. B. 3,320 units. C. 3,240 units. D. 3,520 units. E. 3,800 units.

Q: Medina Corp. uses the weighted average method for inventory costs and had the following information available for the year. The number of units transferred to finished goods during the year is: 200 units 400 units 3,200 units Beginning inventory of goods in process (40% complete, $1,100) Ending inventory of goods in process (80% complete)............................................................. Total units started during the year............................................................. A. 3,200 units. B. 3,000 units. C. 3,400 units. D. 3,160 units. E. 3,500 units.

Q: A company uses the weighted average method for inventory costing. During a period, Department A finished and transferred 50,000 units to Department B. Also, during the period, 10,000 units were started but brought only to a stage of being 3/5 completed. The number of equivalent units produced by Department A during the period was: A. 44,000 units. B. 50,000 units. C. 54,000 units. D. 56,000 units. E. 60,000 units.

Q: At the beginning of the recent period, there were 900 units of product in a department, one-third completed. These units were finished and an additional 5,000 units were started and completed during the period. 800 units were still in process at the end of the period, one-fourth completed. Using the weighted average method, the equivalent units produced by the department were: A. 5,000 units. B. 5,900 units. C. 6,100 units. D. 5,500 units. E. 6,700 units.

Q: A company's beginning work in process inventory consisted of 20,000 units that were 1/5 complete with respect to direct labor. These beginning units were completed and another 90,000 units were started during the current period. Of those started, 60,000 were finished and the remaining 30,000 were 1/3 complete at the end of the period. Using the weighted-average method, the equivalent units of production with regard to direct labor were: A. 60,000. B. 74,000. C. 76,000. D. 90,000. E. 96,000.

Q: A company uses a process cost accounting system. Its Assembly Department's beginning inventory consisted of 50,000 units, 3/4 complete with respect to direct labor and overhead. The department completed and transferred out 127,500 units this period. The ending inventory consists of 40,000 units that are 1/4 complete with respect to direct labor and overhead. All direct materials are added at the beginning of the process. The department incurred direct labor costs of $24,000 and overhead costs of $32,000 for the period. Assuming the weighted average method, the direct labor cost per equivalent unit (rounded to the nearest cent) is: A. $0.14. B. $0.16. C. $0.17. D. $0.30. E. $0.37.

Q: The Machining Department started the current month with a beginning goods in process inventory of $10,000. During the month, it was assigned the following costs: direct materials, $76,000; direct labor, $24,000; and factory overhead, 50% of direct labor cost. Also, inventory with a cost of $109,000 was transferred out of the department to the next phase in the process. The ending balance of the Goods in Process Inventory account for the Machining Department is: A. $ 13,000. B. $ 56,000. C. $ 59,000. D. $110,000. E. $165,000.

Q: Which of the following statements is most accurate? A. In process costing, estimating the degree of completion of units is usually more accurate for conversion costs than for direct materials. B. The weighted average method uses the stage of completion of the current period's beginning goods in process inventory account in calculating equivalent units. C. The weighted average method focuses on the total costs and total equivalent units completed to date; this is the major difference between the weighted average method and the FIFO method of calculating equivalent units of production. D. The FIFO method of calculating equivalent units of production merges the work and the costs of the beginning inventory with the work and the costs done during the current period. E. It is not possible for there to be a significant difference between the cost of completed units between the weighted average and the FIFO methods.

Q: Which of the following is not one of the four steps in accounting for production activity and assigning costs during a period under a process cost system? A. Determine over or underapplied overhead. B. Determine the physical flow of units. C. Compute equivalent units of production. D. Compute the cost per equivalent unit. E. Assign and reconcile costs.

Q: Which of the following is the best explanation for why it is necessary to calculate equivalent units of production in a process costing environment? A. In most manufacturing environments, it is not possible to conduct a physical count of units. B. Companies often use a combination of a process costing and job order costing systems. C. In most process costing systems, direct materials are added at the beginning of the process while conversion costs are added evenly throughout the manufacturing process. D. All of the work to make a unit 100% complete and ready to move to the next stage of production or to finished goods inventory may not have been completed in a single time period. E. In most cases, there is no difference between physical units and equivalent units of production.

Q: Equivalent units of production are equal to: A. The number of units that could have been completed if all effort had been applied to units that were started and completed during a period. B. The number of finished units actually produced during a period. C. The number of units introduced into the process during a period. D. The number of units still in process at the end of a period. E. Physical units that were started and completed during a period.

Q: A measure of the productivity of a process with respect to its use of direct materials, direct labor, or overhead, and an expression of the activity of a process as the number of units that would have been processed during a period if all effort had been applied to units that were started and finished during the period, is called: A. Manufacturing overhead. B. Units in process. C. A job cost sheet. D. Equivalent units of production. E. Process cost summary.

Q: Which of the following characteristics applies to process cost accounting but not to job order cost accounting? A. Use of a predetermined overhead rate. B. Identifiable lots of production. C. Equivalent units of production. D. Labor time ticket for each employee. E. Use of a single Goods in Process Inventory account.

Q: Hou Company applies factory overhead to its production departments on the basis of 90% of direct labor costs. In the Assembly Department, Hou had $125,000 of direct labor cost, and in the Finishing Department, Hou had $35,000 of direct labor cost. The entry to apply overhead to these production departments is: A. Debit Factory Overhead Assembly $112,500; debit Factory Overhead Finishing $31,500; credit Goods in Process Inventory $144,000. B. Debit Factory Overhead $144,000; credit Goods in Process Inventory Assembly $112,500; credit Goods in Process Finishing $31,500. C. Debit Factory Overhead $144,000; credit Factory Payroll $144,000. D. Debit Goods in Process Inventory - Assembly $112,500; debit Goods in Process Inventory Finishing $31,500; credit Factory Overhead $144,000. E. Debit Factory Payroll $144,000; credit Cash $144,000.

Q: 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 the choices include characteristics of process manufacturing systems.

Q: Which of the following products is least likely to be produced in a process manufacturing system? A. Compact disks B. Slacks for casual wear C. Baseball hats D. Calculators E. Custom cabinets

Q: The cost of units transferred from Goods in Process Inventory to Finished Goods Inventory is called the cost of goods manufactured.

Q: Since the process cost summary describes the activities of a production department for a specified reporting period, it does not present information about any costs incurred in prior periods.

Q: The process cost summary presents calculations of the cost of units completed during the reporting period, but does not present any information about the ending goods in process inventory.

Q: A process cost summary for a production department accounts for all costs assigned to that department during the period plus costs that were in the department's Goods in Process Inventory account at the beginning of the period.

Q: One section of the process cost summary describes the equivalent units of production for the department during the reporting period and presents the calculations of the costs per equivalent unit.

Q: If a department that applies process costing starts the reporting period with 50,000 physical units that were 25% complete with respect to direct materials and 40% complete with respect to direct labor, it must add 12,500 equivalent units of direct materials and 20,000 equivalent units of direct labor to complete them.

Q: Once equivalent units are calculated for materials, this number will also be used for direct labor and factory overhead.

Q: If a production department has 100 equivalent units of production with respect to direct materials in a given reporting period, the equivalent units of production with respect to direct labor also must be 100.

Q: In the same time period, it is possible that a production department can produce 1,000 equivalent finished units with respect to direct materials and 1,200 equivalent finished units with respect to direct labor.

Q: The number of equivalent units of production assigned to ending goods in process inventory should be equal to or less than the number of physical units in ending goods in process inventory.

Q: If the predetermined overhead allocation rate is 225% of direct labor cost, and the Mixing Department's direct labor cost for the reporting period is $10,000, the following entry would be made to record the allocation of overhead to the products processed in this department: Goods in Process Inventory, Mixing Dept....................................... 225,000 Factory Overhead.. 225,000

Q: If the predetermined overhead allocation rate is 85% of direct labor cost, and the Painting Department's direct labor cost for the reporting period is $20,000, the following entry would be made to record the allocation of overhead to the products processed in this department: Factory Overhead 17,000 Goods in Process Inventory, Painting Dept 17,000

Q: If the predetermined overhead allocation rate is 350% of direct labor cost and the Painting Department's direct labor cost for the reporting period is $20,000, the following entry would record the allocation of overhead to the products processed in this department: Goods in Process Inventory, Painting Dept......................................... 70,000 Factory Overhead. . 70,000

Q: A process cost accounting system records all factory overhead costs directly in the Goods in Process Inventory accounts.

Q: In process costing, indirect materials are charged directly to Goods in Process Inventory.

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

Q: If the indirect materials cost for a reporting period was $37,500, the following journal entry would be recorded in the process cost accounting system: Factory Overhead.................. 37,500 Raw Materials Inventory 37,500

Q: In a process cost accounting system, factory overhead costs can be allocated to production departments by using a predetermined overhead allocation rate.

Q: If Department G uses $53,000 of direct labor and Department H uses $21,000 of direct labor, the following journal entry would be recorded using a process cost accounting system: Goods in Process Inventory, Department G.......................... 53,000 Goods in Process Inventory, Department H.......................... 21,000 Factory Payroll 74,000

Q: The following journal entry would be made to record the use of $6,100 of direct labor in a production department during the reporting period: Factory Payroll............................................................. .................................................... 6,100 Goods in Process Inventory. 6,100

Q: In a process costing system, factory labor costs incurred in a reporting period are presented on the income statement as Factory Labor Expense.

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

Q: In process cost accounting, direct labor includes only the labor that is applied directly to the products.