Q&A Hero

Q: Allocated overhead ____________________________ vary depending upon the allocation method used.

Q: The major advantages of using a single plantwide overhead rate are ____________________ and ____________________.

Q: A _____________________ is a collection of costs that are related to the same or similar activity.

Q: The _______________ stage of ABC is to compute an activity rate for each cost pool and then use this rate to allocate overhead costs to products.

Q: The premise of ABC is that it takes ____________________ to make products and provide services.

Q: The departmental overhead rate method allows each department to have its own overhead rate and its own ____________________.

Q: The ______________________ overhead rate method uses a different overhead rate for each production department.

Q: A _______________________ overhead rate is a single overhead rate determined by using volume-related measures.

Q: The ________________________ is the target of the cost assignment.

Q: ________________________focuses on activities and the cost of carrying out activities.

Q: The ________________________ overhead rate method uses multiple volume-based measures to allocate overhead costs to products.

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 valuation method, the equivalent units produced by the department were: A. 6,700 units. B. 5,900 units. C. 5,800 units. D. 6,100 units. E. 8,500 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 FIFO valuation method, the equivalent units produced by the department were: A. 6,700 units. B. 5,900 units. C. 5,800 units. D. 6,100 units. E. 8,500 units.

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 Assume the company uses the weighted-average inventory method. 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? A. 21,000; 23,000 B. 26,000; 19,250 C. 21,000; 19,250 D. 26,000; 23,000 E. 19,250;19,250

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 Assume the company uses FIFO inventory. 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? 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: 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 one-third complete at the end of the period. Using the weighted-average method, the equivalent units of production were: A. 60,000 B. 74,000 C. 76,000 D. 86,000 E. 90,000

Q: A company's beginning work in process inventory consisted of 20,000 units that were one-fifth 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 one-third complete at the end of the period. Using FIFO, the equivalent units of production were: A. 60,000 B. 74,000 C. 76,000 D. 86,000 E. 90,000

Q: To compute an equivalent unit 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: Assume that the Hood River Juice Company applies factory overhead to its production departments on the basis of 65% of direct labor costs. Direct labor in the Squeezing Department was $80,000 and direct labor in the Filtering Department was $12,000. The entry to apply overhead to these production departments is: A. Factory Overhead Squeezing 52,000 Factory Overhead Filtering 7,800 Work in Process 59,800 B. Factory Overhead 59,800 Work in Process Squeezing 52,000 Work in Process Filtering 7,800 C. Factory Overhead 59,800 Factory Payroll 59,800 D. Work in Process Squeezing 52,000 Work in Process Filtering 7,800 Factory Overhead 59,800 E. Factory Payroll 59,800 Cash 59,800

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. Factory Overhead Assembly 112,500 Factory Overhead Finishing 31,500 Work in Process 144,000 B. Factory Overhead 144,000 Work in Process Assembly 112,500 Work in Process Finishing 31,500 C. Factory Overhead 144,000 Factory Payroll 144,000 D. Work in Process Assembly 112,500 Work in Process Finishing 31,500 Factory Overhead 144,000 E. Factory Payroll 144,000 Cash 144,000

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: Which of the following pair of journal entries correctly records the current months activity where the company had $21,030 in total factory labor costs that were paid in cash with $16,200 of this total for direct labor? A. Factory Payroll 21,030 Cash 21,030 Wage Expense 16,200 Factory Overhead 4,830 Factory Payroll 21,030 B. Factory Payroll 21,030 Cash 21,030 Goods in Process Inventory 16,200 Wage Expense 4,830 Factory Payroll 21,030 C. Cash 21,030 Factory Payroll 21,030 Goods in Process Inventory 16,200 Factory Overhead 4,830 Factory Payroll 21,030 D. Factory Payroll 21,030 Cash 21,030 Goods in Process Inventory 16,200 Factory Overhead 4,830 Factory Payroll 21,030 E. Cash 21,030 Factory Payroll 21,030 Factory Payroll 21,030 Goods in Process Inventory 21,030

Q: Which of the following pair of journal entries correctly records the current months activity where the company had $42,060 in total factory labor costs that were paid in cash with $32,400 of this total for direct labor? A. Factory Payroll 42,060 Cash 42,060 Wage Expense 32,400 Factory Overhead 9,660 Factory Payroll 42,060 B. Factory Payroll 42,060 Cash 42,060 Goods in Process Inventory 32,400 Wage Expense 9,660 Factory Payroll 42,060 C. Cash 42,060 Factory Payroll 42,060 Goods in Process Inventory 32,400 Factory Overhead 9,660 Factory Payroll 42,060 D. Factory Payroll 42,060 Cash 42,060 Goods in Process Inventory 32,400 Factory Overhead 9,660 Factory Payroll 42,060 E. Cash 42,060 Factory Payroll 42,060 Factory Payroll 42,060 Goods in Process Inventory 42,060

Q: In a process costing 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. B. Goods in Process and Finished Goods. C. Finished Goods and Goods in Process. D. Goods in Process and Factory Overhead. E. Cost of Goods Sold and Finished Goods.

Q: Which of the following pair of journal entries correctly records the current months activity where $250,000 of raw material was purchased for cash and $150,000 of direct material and $60,000 of indirect materials were used in the production process? A. Cash 250,000 Raw Materials Inventory 250,000 Raw Materials Inventory 210,000 Goods in Process Inventory 150,000 Factory Overhead 60,000 B. Raw Materials Inventory 250,000 Cash 250,000 Goods in Process Inventory 150,000 Factory Overhead 60,000 Raw Materials Inventory 210,000 C. Raw Materials Inventory 250,000 Cash 250,000 Raw Materials Inventory 210,000 Goods in Process Inventory 150,000 Factory Overhead 60,000 D. Cash 250,000 Raw Materials Inventory 250,000 Goods in Process Inventory 150,000 Factory Overhead 60,000 Raw Materials Inventory 210,000 E. Raw Materials Inventory 250,000 Cash 250,000 Goods in Process Inventory 250,000 Raw Materials Inventory 250,000

Q: Which of the following pair of journal entries correctly records the current months activity where $125,000 of raw material was purchased for cash, and $75,000 of direct material and $30,000 of indirect materials were used in the production process? A. Cash 125,000 Raw Materials Inventory 125,000 Raw Materials Inventory 105,000 Goods in Process Inventory 75,000 Factory Overhead 30,000 B. Raw Materials Inventory 125,000 Cash 125,000 Goods in Process Inventory 75,000 Factory Overhead 30,000 Raw Materials Inventory 105,000 C. Raw Materials Inventory 125,000 Cash 125,000 Raw Materials Inventory 105,000 Goods in Process Inventory 75,000 Factory Overhead 30,000 D. Cash 125,000 Raw Materials Inventory 125,000 Goods in Process Inventory 75,000 Factory Overhead 30,000 Raw Materials Inventory 105,000 E. Raw Materials Inventory 125,000 Cash 125,000 Goods in Process Inventory 125,000 Raw Materials Inventory 125,000

Q: Which of the following journal entries correctly records the current months activity where $60,000 of direct material and $17,000 of indirect materials were used in the production process? A.. Raw Materials Inventory 77,000 Goods in Process Inventory 60,000 Factory Overhead 17,000 B. Goods in Process 77,000 Raw Materials Inventory 77,000 C. Goods in Process 17,000 Factory Overhead 60,000 Cash 77,000 D. Goods in Process 60,000 Factory Overhead 17,000 Raw Materials Inventory 77,000 E. Raw Materials Inventory 77,000 Cash 77,000

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: Direct material costs are recorded: A. Indirectly to Goods in Process account. B. Indirectly to a Finished Goods account. C. Directly to a Goods in Process account. D. Directly to a Finished Goods 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 cater to 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. The volume of production is low and standardized products are produced.

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: Which of the following characteristics applies to process cost accounting and 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 account.

Q: A system of accounting in which the costs of each process are accumulated separately 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: A department had 12,500 units that were 20% complete in beginning Goods in Process Inventory. During the current period 60,000 units were transferred in. Ending Goods in Process Inventory was 15,000 units that were 70% complete. Assume this company uses the FIFO method of process costing and direct material is added uniformly throughout the process. What are the equivalent units produced with respect to direct material? A. 65,500 B. 57,500 C. 37,000 D. 47,500 E. 68,000

Q: A department had 12,500 units that were 20% complete in beginning Goods in Process Inventory. During the current period 60,000 units were transferred in. Ending Goods in Process Inventory was 15,000 units that were 70% complete. Assume this company uses the weighted-average method of process costing and direct material is added uniformly throughout the process. What are the equivalent units produced with respect to direct material? A. 65,500 B. 57,500 C. 37,000 D. 47,500 E. 68,000

Q: Which of the following is true when computing cost per equivalent unit in a FIFO process costing system? A. Prior period costs are combined with costs incurred in the current period and then divided by the equivalent units of production. B. Costs incurred in the current period are divided by the equivalent units of production. C. Total cost to account for is divided by the equivalent units of production. D. Equivalent units of production are divided by costs incurred in the current period. E. Equivalent units of production are divided by cost to account for.

Q: Which of the following is not one of the four steps in accounting for production activity in a period? A. Determine over- or underapplied overhead. B. Analyze the physical flow of units. C. Analyze equivalent units. D. Determine cost per equivalent unit. E. Prepare a cost reconciliation.

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 that period. B. The number of finished units actually produced that period. C. The number of units introduced into the process that period. D. The number of units still in process that period. E. Physical units that were completed this period from all effort being applied to them.

Q: 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 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. In a multistep process, there will be multiple Goods in Process accounts.

Q: Which of the following five types of 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. Oil paintings.

Q: The following journal entry would be made to record the transfer of completed goods from Shoving to the finished goods inventory for this period: Finished Goods Inventory 525,000 Goods in Process Inventory, Shoving Dept 525,000

Q: If the predetermined overhead allocation rates were based on direct labor costs, the rates for the Pushing and Shoving Departments were 50% and 150%, respectively.

Q: The following journal entry would be made to record the use of direct labor in the reporting period covered by the information: Goods in Process Inventory, Pushing Dept 120,000 Goods in Process Inventory, Shoving Dept 70,000 Factory Payroll 190,000

Q: The Packing Department transferred out completed units with a cost of $74,000. This transfer should be recorded with the following entry: Finished Goods Inventory 74,000 Goods in Process Inventory, Packing Dept 74,000

Q: All costs of the processes in a process costing system ultimately pass through the Cost of Goods Sold account.

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: 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 usually be equal to or less than the number of physical units in ending goods in process inventory.

Q: If a department that applies process costing starts the reporting period with 100,000 physical units that were 20% complete with respect to direct labor, it must add 80,000 equivalent units of labor to complete them.

Q: If the allocated overhead equaled the actual overhead, then total manufacturing costs incurred in both departments during the reporting period were $35,300.

Q: The company uses the same predetermined overhead allocation rate (based on direct labor) for the Pickling and Canning Departments.

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

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

Q: Factory overhead costs can be allocated by a process cost accounting system to the output of production departments by using a predetermined overhead allocation rate.

Q: The following journal entry would be made to record the use of direct labor in the reporting period covered by the information: Factory Payroll 6,100 Goods in Process Inventory, Pickling Dept 4,000 Goods in Process Inventory, Canning Dept 2,100

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.

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 by the 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: If Department T uses $89,000 of direct labor and Department V uses $11,000 of direct labor, the following journal entry would be recorded by the process cost accounting system: Goods in Process Inventory, Department T 89,000 Goods in Process Inventory, Department V 11,000 Factory Overhead 100,000

Q: If Department N incurred direct labor cost of $22,000 and Department O incurred direct labor cost of $43,000, the following journal entry would be recorded by the process cost accounting system: Factory Payroll 65,000 Goods in Process Inventory, Department N 22,000 Goods in Process Inventory, Department O 43,000

Q: If the factory labor cost for a month was $123,000 (paid in cash), the following journal entry would be recorded by the process cost accounting system: Factory Payroll 123,000 Cash 123,000

Q: After all process cost accounting journal entries are recorded and posted for a reporting period, the Factory Payroll account should have a zero balance.

Q: The following journal entry would be made to record the use of direct materials in the reporting period covered by the information: Goods in Process Inventory, Pickling Dept 16,000 Goods in Process Inventory, Canning Dept 3,000 Raw Materials Inventory 19,000

Q: A materials consumption report is a source document that summarizes the materials used during a reporting period.

Q: If Department Q uses $60,000 of direct materials and Department T uses $15,000 of direct materials, the following journal entry would be recorded by the process cost accounting system: Goods in Process Inventory, Department Q 60,000 Goods in Process Inventory, Department T 15,000 Finished Goods Inventory 75,000

Q: If Department J uses $40,000 of direct materials and Department K uses $70,000 of direct materials, the following journal entry would be recorded by the process cost accounting system: Raw Materials Inventory 70,000 Goods in Process Inventory, Department J 40,000 Goods in Process Inventory, Department K 30,000

Q: 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: Goods in Process Inventory, Department A 10,000 Goods in Process Inventory, Department B 15,000 Raw Materials Inventory 25,000