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Exam 20: Process Cost Accounting

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Question 41

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When defining direct costs and indirect costs in process costing, it is the process that is the cost object.

A) True
B) False

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Question 42

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To determine unit cost under a process cost accounting system, equivalent units produced must be calculated if the company has goods in process inventories.

A) True
B) False

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Question 43

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The following data are available for a company's manufacturing activities: 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?

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:

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

A hybrid costing system would be most appropriate when:

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:

The process cost summary is an important managerial accounting report produced by a process cost accounting system.

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:

If Department A uses $10,000 of direct materials and Department B uses $15,000 of direct materials, the following journal entry would be recorded by the process cost accounting system:

Describe the flow of labor in a process cost accounting system, including accounts used.

The second step in accounting for production activity in a period is to compute ____________________.

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

Prepare general journal entries to record the following production activities for Sherman Manufacturing. a. Purchased $82,000 of raw materials on credit. b. Used $63,500 of direct materials in production. c. Used $12,800 of indirect materials.

If a process has _______________ or _______________ inventory of partially completed production, equivalent units must be calculated so that total costs incurred during the period are assigned to all units worked on.

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:

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:

Describe the flow of materials in a process cost accounting system, including accounts used.

In a process costing accounting system, factory wages are debited to _____________, and when direct labor is used, that account is credited and ____________________ is debited. When indirect labor is used, the ________________________ account is debited and ______________________ is credited.

In a process cost accounting system, a department's production should be measured in terms of equivalent units when its beginning or ending inventory includes goods in process.