ACC 560 WK 3 Quiz 3
1. Process cost accounting focuses on the process involved in mass-producing products that are very similar in nature.
2. Process cost systems are used to apply costs to a specific job, such as the manufacturing of a specialized machine.
3. A company that produces motion pictures would likely use a process cost system.
4. In a process cost system, costs are tracked through a series of connected manufacturing processes or departments, rather than by individual jobs.
5. In a process cost system, total costs are determined at the end of a month or year.
6. Separate work in process accounts are maintained for each production department or manufacturing process in a process cost system.
7. In a process cost system, materials, labor and overhead are only added in the first production department.
8. The assignment of the three manufacturing cost elements to Work in Process in a process cost system is the same as in a job order cost system.
9. Fewer materials requisitions are generally required in a process cost system than in a job order cost system.
10. In a process cost system, labor costs incurred may be captured on time tickets.
11. A primary driver of overhead costs in continuous manufacturing operations is machine time used.
12. Equivalent units of production are used to determine the cost per unit of completed products.
13. Equivalent units of production measure the work done during a period, expressed in fully completed units.
14. Equivalent units of production is the sum of units completed and transferred out plus equivalent units of beginning work in process.
15. The weighted-average method of computing equivalent units is the most widely used method in practice.
16. There are no units in process at the beginning of the period, 1,500 units in process at the end of the period that are 40% complete, and 15,000 units transferred out during the period. Based on this information, there were 14,400 equivalent units of production during the period.
17. The first step performed in preparing a production cost report is computing the equivalent units of production.
18. Equivalent units of production must be calculated before the unit production costs can be computed.
19. The physical units in a department are another name for the equivalent units of production.
20. Unit material cost is computed by taking total material costs charged to the department for the period and dividing by the physical units in the process during the period.
21. When equivalent units of production are different for materials and conversion costs, unit costs are computed for materials, conversion, and total manufacturing.
22. The total manufacturing cost per unit is used in costing the units completed and transferred during the period.
23. A production cost report is an internal document for management that shows production quantity and cost data for a particular job.
24. Production cost reports provide a basis for evaluating the productivity of a department.
25. Companies often use a combination of a process cost and a job order cost system, called operations costing.
a26. The FIFO method is easier to understand and use than the weighted-average method.
a27. The FIFO method is conceptually superior to the weighted-average method.
a28. When comparing the FIFO with the weighted-average method, the FIFO method provides current cost information.
a29. There are no units in ending work in process at the end of the period under the FIFO method.
a30. Companies using the weighted-average method do not complete units left over from the previous accounting periods, they start new units.
31. In continuous process manufacturing, generally once the production begins, it continues until the finished product emerges.
32. One similarity of process cost accounting with job order cost accounting is that both determine total manufacturing costs after each job.
33. The flow of costs in a process costing system requires that materials be added in one department, labor added in another department and manufacturing overhead in a third department.
34. When finished goods are sold, the entry to record the cost of goods sold is a debit to Finished Goods Inventory and a credit to Cost of Goods Sold.
35. When there is no beginning work in process and materials are entered at the beginning of the process, equivalent units of materials are the same as the units started into production.
36. In order to compute the physical unit flow, a company must first compute unit production costs.
37. Under the FIFO method, it is assumed that the beginning work in process is completed before new work is started.