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Identify each statement as true or false. If false, indicate howto correct the statement.

1. Process cost systems are used to apply costs to similarproducts that are mass-produced in a continuous fashion.
2. A process cost system is used when each finished unit isindistinguishable from another.
3. Companies that produce soft drinks, motion pictures, andcomputers chips would all use process cost accounting.
4. In a process cost system, costs are tracked by individualjobs.
5. Job order costing and process costing track differentmanufacturing costs elements.
6. Both job order costing and process costing account for directmaterials, direct labor, and manufacturing overhead.
7. Costs flow through the accounts in the same basic way for bothjob order costing and process costing.
8. In a process cost system, only one work in process account isused.
9. In a process cost system, costs are summarized in a job costsheet.
10. In a process cost system, the unit cost is total manufacturingcosts for the period divided by the units produced during theperiod.

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Deanna Hettinger
Deanna HettingerLv2
28 Sep 2019
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Related questions

2. The expense of operating a shipping department would likely beclassified in which cost behavior category?
A. Fixed
B. Mixed
C. Variable

3. Property tax on an office building would likely be classified inwhich cost behavior category?
A. Fixed
B. Mixed
C. Variable

4. Inventoriable costs eventually appear as expenses on an incomestatement as part of:
A. the cost of goods sold
B. selling expenses
C. administrative expenses

5. Which of the following would one be able to find on a job costsheet in a typical job cost system?
Actual direct material cost Actual manufacturing overheadcost
A. Yes Yes
B. Yes No
C. No Yes
D. No No

6. Which of the following enterprises would be more likely to useprocess costing rather than job-order costing?
A. A manufacturer of yachts
B. A small appliance repair shop
C. A tire manufacturer

7. A predetermined overhead rate is based on direct labor-hours toapply manufacturing overhead to jobs. For a particular month,manufacturing overhead cost was estimated to be $30,000; directlabor-hours were estimated to be based 10,000. Actual overhead was$32,500; actual direct labor-hours were 11,000. By how much wasoverhead overapplied or underapplied?
A. $2,500 overaplied
B. $2,500 underapplied
C. $500 overapplied
D. $500 underapplied

8. In job order costing, the different between total manufacturingcosts and the cost of goods manufactured is:
A. the change in work-in-process inventory over the relatedperiod
B. work-in-process inventory at the end of the related period
C. Zero as total manufacturing costs and the cost of goodsmanufactured are the same thing

9. In process costing, a separate work in process account is keptfor each:
A. processing department
B. individual order
C. equivalent unit

I. The basic parts of a joborder costing system are the:

A. Cost______________ and _________________ procedures.

B. ____________________ documents.

C. Accountsthat a company uses when it incurs costs for direct ____________,direct ________________, and ___________________.

II. Accounting for materialsrequires three types of entries.

A. With the ______________ of materials,debit Materials Inventory and credit Accounts Payable.

B. With the _______________ of directmaterials to ________________, debit Work in Process Inventory andcredit Materials Inventory.

C. With the transfer of__________________ materials to production, debit Overhead andcredit Materials Inventory.

III. Accounting for labor requirestwo types of entries.

A. For payroll costs incurred for_____________ labor, debit Work in Process Inventory and creditPayroll Payable.

B. For payroll costs incurred for_______________ labor, debit Overhead and credit PayrollPayable.

IV. Accounting for other overhead requires twotypes of entries.

A. Other overhead includes plant____________, property _____________, insurance, and_______________.

B. To record _____________ overhead costs,debit Overhead and credit Cash or Accumulated Depreciation.

C. To record _____________ overheadcosts, debit Work in Process Inventory and credit Overhead.

D. The actual (debits) and estimated(credits) overhead costs are ________________ at the end of theperiod to determine the accuracy of overhead costrecognition.

V. To recordthe transfer of ________________ units, debit Finished GoodsInventory and credit Work in Process Inventory.

VI. When a companyuses a perpetual inventory system, two accounting entries are madewhen products are sold.

A. To record the sold product’s________________, debit Accounts Receivable (or Cash) and creditSales.

B. To record the sold product’sassociated ____________, debit Cost of Goods Sold and creditFinished Goods Inventory.

VII. Each job in production has a job order_________________.

A. Hasspace for direct materials, direct labor, and overhead costs.

B. Includesthe job order number, product specifications, customer name, dateof order, projected completion date, and a cost summary.

C. Forincomplete jobs, they make up the _______________ ledger for theWork in Process Inventory account.

D. When ajob is completed, the costs are totaled on the_____________________.

1. Unit cost is computed to_____________ items in inventory.

2. Product ___________Cost = Total Costs for Job ÷ Number of Good Units Produced

VIII. Job order costing systems are also used in______________ organizations.

A. Job ordercost cards track ________________ contracts.

IX. Overhead costs are allocated in foursteps.

A. Step 1: _____________ the overheadrate.

1. A ________________ overheadrate is calculated as estimated overhead costs divided by estimatedcost driver activity.

B. Step 2:______________ the overhead rate.

1. Costs are assigned by multiplyingthe actual cost _____________ activity by the predeterminedoverhead rate.

C. Step 3:Record ________________ overhead costs

D. Step 4:_________________ applied and actual overhead amounts

1. Ifover- or underapplied amounts are minimal, credit or debit_________________.

2. Ifover- or underapplied amounts are material, adjustments should bemade to the inventory accounts affected.

X. The__________________ approach to applying overhead costs is to use asingle plantwide rate.

XI. The moreaccurate _____________________ approach to applying overhead costscreates many smaller activity pools and establishes separate ratesfor each pool.

Indicate whether each statement istrue (T) or false (F).

____ 1. Examples of carrying costs of inventory are obsolescence,opportunity cost of investment tied up in inventory, andinspection.

____ 2. The EOQ model does not include quantity discounts lost on inventorypurchases.

____ 3. EOQ minimizes the annual relevant total carrying costs ofinventory.

____ 4. An example of a cost pertaining to inventory that usually isirrelevant to the decision of how much to order is salaries ofstockroom workers.

____ 5. The reorder point decreases if the ordering costs per purchaseorder increase.

____ 6. JIT purchasing should be guided by the EOQ decision model.

____ 7. Adopting JIT purchasing is likely to result in fewer suppliers foreach item and more paperwork.

____ 8. JIT production operates as a push-through system.

____ 9. A key feature of backflush costing is that it tracks manufacturingcosts sequentially.

____ 10. When asingle Inventory Control account is used in backflush costing, thisaccount is restricted solely to direct materials, whether they arein storerooms, in process, or in finished goods.

____ 11. Althoughbackflush costing may not strictly adhere to generally acceptedaccounting principles, the accounting principle of materialityworks in favor of backflush costing when inventories are low.

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