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Chapter 16 Question 1. A company's beginning Work in Process inventory consisted of 20,000 units that were 80% complete with respect to direct labor. A total of 90,000 were finished during the period and 25,000 remaining in Work in Process inventory were 40% complete with respect to direct labor at the end of the period. Using the weighted-average method, the equivalent units of production with regard to direct labor were: 1. 46,000. 2. 100,000. 3. 76,000. 4. 90,000. 5. 116,000. Question 2 A key idea in process costing that refers to the number of units that could have been started and completed given the costs incurred during the period is known as: 1. Manufacturing overhead. 2. Units in process. 3. A job cost sheet. 4. Equivalent units of production. 5. Process cost summary. Question 3 A process cost summary is a managerial accounting report that describes all but which of the following: 1. The gross profit earned on the sale of products.. 2. The equivalent units of production by the Department.. 3. How the costs were assigned to the output.. 4. Physical transfers for a Department.. 5. The cost charged to a Department.. Question 4 A production department's output for the most recent month consisted of 10,000 units completed and transferred to the next stage of production and 10,000 units in ending Work in Process inventory. The units in ending Work in Process inventory were 50% complete with respect to both direct materials and conversion costs. There were 1,000 units in beginning Work in Process inventory, and they were 70% complete with respect to both direct materials and conversion costs. Calculate the equivalent units of production for the month, assuming the company uses the weighted average method. 1. 10,000 units. 2. 10,300 units. 3. 15,000 units. 4. 15,300 units. 5. 10,700 units. Question 5 A production department's output for the most recent month consisted of 8,000 units completed and transferred to the next stage of production and 5,000 units in ending Work in Process inventory. The units in ending Work in Process inventory were 50% complete with respect to both direct materials and conversion costs. Calculate the equivalent units of production for the month, assuming the company uses the weighted average method. 1. 6,500 units.. 2. 9,000 units.. 3. 13,000 units.. 4. 5,500 units.. 5. 10,500 units.. Question 6 All of the following are true about using a predetermined overhead rate to apply overhead except, 1. Estimates are used to calculate the rate.. 2. Using this rate provides managers with up-to-date estimates of the costs of their processes during the period. 3. A single allocation basis may fail to provide useful allocations for all production departments. 4. The rate is prepared at the beginning of the period. 5. The rate is used to apply overhead at the end of the accounting period. Question 7 Clarksen Company uses a process costing system. The company requisitioned $93,000 of materials for Department A and $67,000 of materials for Department D. The entry to record the use of the direct materials by these two departments is: 1. Debit Raw Materials Inventory $160,000; credit Accounts Payable $160,000. 2. Debit Work in Process Inventory—Dept. A $93,000; debit Work in Process Inventory—Dept. D $67,000; credit Raw Materials Inventory $160,000. 3. Debit Factory overhead $160,000; credit Raw Materials Inventory $160,000. 4. Debit Raw Materials Inventory—Dept. A $93,000; debit Raw Materials Inventory—Dept. D $67,000; credit Work in Process Inventory $160,000. 5. Debit Work in Process Inventory—Dept. A $93,000; debit Work in Process Inventory—Dept. D $67,000; credit Accounts Payable $160,000. Question 8 Dazzle, Inc. produces beads for jewelry making use. The following information summarizes production operations for June. The journal entry to record June production activities for goods transferred 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 goods432,000 Cost of goods sold 444,000 Credit sales 810,000 1. Debit Finished Goods Inventory $432,000; credit Work in Process Inventory $432,000. 2. Debit Work in Process Inventory $444,000; credit Finished Goods Inventory $444,000. 3. Debit Work in Process Inventory $432,000; credit Finished Goods Inventory $432,000. 4. Debit Finished Goods Inventory $444,000; credit Work in Process Inventory $444,000. 5. Debit Work in Process Inventory $432,000; credit Cash $432,000. Question 9 Equivalent units of production are equal to: The number of units that could have been started and completed given the costs incurred during the period. 1. The number of finished units actually produced during a period. 2. The number of units started into the process during a period. 3. The number of units still in process at the end of a period. 4. Physical units that were started and completed during a period. Question 10 In a process costing system, direct material costs incurred are recorded: 1. Indirectly to a Work in Process Inventory account from Factory Overhead. 2. Indirectly to a Finished Goods Inventory account from Factory Overhead. 3. Directly to a Work in Process Inventory account. 4. Directly to a Finished Goods Inventory account. 5. Directly to a Cost of Goods Sold account. Question 11 In a process operation, the direct labor of a production department includes: 1. All labor used exclusively by that department, even if the labor is not applied to the product itself. 2. All labor used exclusively by that department, but only if the labor is applied to the product itself. 3. All labor for that department, including labor for services that help more than one production department, such as clerical, repair, and computer technicians. 4. Only labor that helps more than one production department, such as clerical, repair, and computer technicians. 5. Only labor that relates to goods finished during the period. Question 12 The combined costs of direct labor and factory overhead per equivalent unit used by many businesses with process operations is called: 1. Physical cost per equivalent unit 2. Overhead cost per equivalent unit 3. Combined cost per equivalent unit 4. Conversion cost per equivalent unit 5. Finished cost per equivalent unit Question 13 The purchase of raw materials on account in a process costing system is recorded with a: 1. Debit to Purchases and credit to Cash. 2. Debit to Purchases and a credit to Accounts Payable. 3. Debit to Raw Materials Inventory and a credit to Accounts Payable. 4. Debit to Accounts Payable and a credit to Raw Materials Inventory. Five. Debit to Work in Process Inventory and a credit to Accounts Payable. Question 14 Using conversion cost per equivalent unit is appropriate for many businesses that use process costing because: 1. Direct materials and direct labor are usually entered into the production process at the same rate. 2. All manufacturing costs are entered into the production process in the same period. 3. Equivalent cost per unit is not sufficient measurement of production activity. 4. The weighted average method of calculating equivalent units requires it. 5. Direct labor and factory overhead enter the production process at the same rate. Question 15 Which of the following characteristics does not apply to job order cost accounting? 1. Aims to compute the cost per unit of product. 2. Identifiable units of production. 3. Equivalent units of production. 4. Use of job cost sheets. 5. Use of a single Work in Process Inventory account. Question 16 Which of the following characteristics does not usually apply to process operations? 1. Each unit of product is separately identifiable. 2. Partially completed products are transferred between processes. 3. Each process is a separate department. 4. A separate Work in Process Inventory is used for each process. 5. Costs are computed using equivalent units. Question 17 Which of the following is the best explanation for why it is necessary to calculate equivalent units of production in a process costing environment? 1. In most manufacturing environments, it is not possible to conduct a physical count of units. 2. Companies often use a combination of a process costing and job order costing systems. 3. 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. 4. 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. 5. In most cases, there is no difference between physical units and equivalent units of production. Question 18 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? 1. Determine over or underapplied overhead. 2. Determine the physical flow of units. 3. Compute the equivalent units of production. 4. Compute the cost per equivalent unit of production. 5. Assign and reconcile costs. Question 19 Which of the following products is least likely to be produced in a process operation? 1. Smartphones 2. Slacks for casual wear 3. Baseball caps 4. Calculators 5. Custom cabinets Question 20 Which of the following products is most likely to be produced in a process operation? 1. Airplanes 2. Cereal 3. Bridges 4. Designer bridal gowns 5. Custom cabinets Question 21 Which of the following statements is most accurate? 1. In process costing, estimating the degree of completion of units is usually more accurate for conversion costs than for direct materials. 2. The FIFO method includes the cost of the beginning Work in Process inventory account