Process Costing

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Question 1
Free
Multiple Choice

Which of the following is the costing system used for mass produced like or similar units of products?

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A

inventory-costing systems

B

job-costing systems

C

process-costing systems

D

weighted-average costing systems

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Question 2
Free
Multiple Choice

Which of the following companies is most likely to use process costing?

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A

Crimpson Color, a company selling customized garments for niche customers

B

Effel & Associates, a consulting firm providing various audit and related services

C

Dental Bright Inc., a company manufacturing and selling toothpaste on a large scale

D

Grimpy Corp., a company manufacturing furniture for customers as per their requirements

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Question 3
Free
Multiple Choice

Process costing would most likely be used to assign costs to products produced by which of these companies?

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A

Jones Flour Mill

B

Riley Automobile Dealer

C

Big Time Yacht Corporation

D

Sullivan and Murphy Law Firm LLC

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Question 4
Free
Multiple Choice

Which of the following statements is true?

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A

In a job-costing system, average production cost is calculated for all units produced.

B

In a process-costing system, each unit uses approximately the same amount of resources.

C

In a job-costing system, overheads are allocated to all units equally.

D

In a process-costing system, individual jobs use different quantities of production resources.

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Question 5
Free
Multiple Choice

Which of the following most accurately describes the contrast between process and job costing?

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A

In process costing, they include all the factors of production but job costing includes only materials and labor

B

job costing includes materials, labor and overhead while process costing only considers conversion costs

C

the main difference is the extent of averaging used to compute the unit costs

D

job costing measures the variable cost of identical jobs while process costing measures the cost of identical products using average units costs of materials and conversion costs, some of which are fixed costs

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Question 6
Multiple Choice

Which if the following are not conversion costs?

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A
the cost of direct laborers who assemble the parts of an automobile
B
the cost of tires on an automobile
C
the cost of depreciation on an automobile assembly plant
D
the cost of electricity to run the tools in the automobile assembly plant
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Question 7
Multiple Choice

Which of the following statements best describes conversion costs?

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A
Conversion costs are all manufacturing and nonmanufacturing costs.
B
Conversion costs are all manufacturing costs other than direct materials costs.
C
Conversion costs are all nonmanufacturing costs including marketing costs.
D
Conversion costs are all nonmanufacturing costs other than fixed selling and distribution costs.
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Question 8
True/False

Job-costing systems separate costs into cost categories according to when costs are introduced into the process of manufacture.

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True
False
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Question 9
True/False

The principal difference between process costing and job costing is that in job costing an averaging process is used to compute the unit costs of products or services.

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True
False
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Question 10
True/False

If manufacturing labor costs are added to the process at a different time compared to other conversion costs, an additional cost category-direct manufacturing labor costs-would be needed to assign these costs to products.

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True
False
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Question 11
True/False

Estimating the degree of completion for the calculation of equivalent units is usually easier for conversion costs than it is for direct materials.

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True
False
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Question 12
True/False

If two different direct materials-such as the circuit board and microphone-are added to the process at different times, a company will need two different direct-materials categories to assign direct materials cost.

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True
False
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Question 13
True/False

Conversion costs include direct materials and direct labor but excludes all other manufacturing and non-manufacturing costs.

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True
False
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Question 14
True/False

Job-costing and process-costing are mutually exclusive, hence a hybrid costing system that combines elements of both job and process costing cannot be used.

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True
False
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Question 15
Essay

There are basically two distinct methods of calculating product costs.
Required:
Compare and contrast the two methods.

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Question 16
Essay

Why do we need to accumulate and calculate unit costs in process costing (and also job costing)?

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Question 17
Essay

The president of the Gulf Coast Refining Corporation wants to know why his golfing partner, who is the chief financial officer of a large construction company, calculates his costs by the job, but his own corporation calculates costs by large units rather than by individual barrel of oil.

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Question 18
Essay

Describe the differences between process costing and job costing. Discuss some typical products which would be more likely to use process costing as compared to some which would be more likely to use job costing.

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Question 19
Multiple Choice

In a process-costing system average unit costs are calculated ________ .

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A
by dividing total costs in a given accounting period by total units produced in that period
B
by multiplying total costs in a given accounting period by total units produced in that period
C
by dividing total costs in a given accounting period by units started in that period
D
by multiplying total costs in a given accounting period by units started in that period
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Question 20
Multiple Choice

Vital Industries manufactured 2400 units of its product Huge in the month of April. It incurred a total cost of $132,000 during the month. Out of this $132,000, $45,700 comprised of direct materials used in the product and the rest was incurred because of the conversion cost involved in the process. Ryan had no opening or closing inventory. What will be the total cost per unit of the product, assuming conversion costs contained $10,000 of indirect labor?

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A
$55
B
$50
C
$39
D
$35
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