Process costing system

Multiple choice questions (MCQs) quiz

1. The process costing system is best suited for:

2. Which of the following businesses is likely to adopt a process costing system?

3. Materials, labor and overhead costs are traced to processing departments rather than individual products or jobs. This statement is true for:

4. In process costing system, the materials can be added in:

5. Which of the following is not relevant to a process costing system?

6. Which of the following is not correct about process costing and job order costing?

7. On June 1, Department A had 3,000 units 50% complete with respect to direct labor and factory overhead; materials are added at the beginning of the process. During June, 15,000 units were started into process in Department A. At the end of June, the ending goods in process of 4,000 units were 80% complete with respect to direct labor and factory overhead. There was no normal and/or abnormal loss of units in Department A during the month of June. The number of units transferred to Department B were:

8. The following data belongs to Department Y of Abraham Company:

• WIP beginning inventory: 6,000 units – 40% complete as to labor and overhead
• Completed and transferred to finished goods store room: 30,000 units
• WIP ending inventory: 1,000 units – 60% compete as to labor and overhead

The number of units started in department Y during the period were:

9. In a process costing system, when partially completed units are expressed in terms of equivalent fully completed units, they are known as:

10. Consider the following data of Department Z:

• Work in process on January 1, 2020: 800 units – all materials, 40% converted
• Processed and transferred out: 20,000 units
• Work in process on January 31, 2020: 1,000 units – all materials, 60% converted

Under weighted average method, the equivalent units of production of Department Z for January are:

11. Consider the following data of Department Z:

• Work in process on January 1, 2020: 800 units – all materials, 40% converted
• Processed and transferred out: 20,000 units
• Work in process on January 31, 2020: 1,000 units – all materials, 60% converted

Under FIFO method, the equivalent units of production of Department Z for January are:

12. The direct materials costing $4,000 has been used in Mixing Department. The correct journal entry would be:

13. In a process costing system, the manufacturing overhead (or factory overhead) is usually applied using:

14. In process costing system, the predetermined overhead rate is computed:

15. When the normal loss in a department is identified at the end of the process, its cost is:

16. While preparing the cost of production report (CPR) of a processing department, the per unit cost from preceding department needs to be adjusted when the:

17. The following data has been taken from the 2nd department of Albari Company:

• Cost from proceeding department: $9,675
• Cost added by the department (Materials + Conversion): $6,500
• Units received from preceding department: 5,625
• Units transferred to finished goods store room: 5,000
• Units still in process (1/3 complete as to conversion costs): 375
• Units lost in process: 250

Based on the above data, the adjustment for lost units in second department should be:

18. The normal or standard loss in processing departments is generally considered:

19. A loss in processing departments which can be avoided under normal and efficient working conditions is generally known as:

20. In process costing, the abnormal loss occurred in a production department is:

21. Which of the following characteristics is relevant to process costing but not to job order costing?

22. Which of the following types of spoilage should not affect the recorded cost of inventories?

23. The work in process inventory at the beginning of the period is 25% complete as to conversion cost. Materials are added at the beginning of the process. If FIFO method is used, the equivalent units for materials are equal to the:

24. The completed units are transferred from Department 3 (the last department) to the finished goods store room. The journal entry for this transfer would be:

25. When completed units are sold to a customer, the cost of units sold is transferred from Finished Goods Inventory Account to Cost of Goods Sold Account. Which one of the following is a correct journal to record this transfer of cost?

26. A section of the cost of production report (CPR), which shows the physical flow of units through the various production departments, is usually labeled as: