CH 3 Test 1

Question 1

True / False

A company that offers customized products would use job order costing.

Answer 1

TRUE

Job order costing is used by companies that offer customized products or services.

Question 2

True / False

Process costing is used to calculate the cost of homogenous goods or services.

Answer 2

TRUE

Process costing is used by companies that produce homogeneous products or services using a series of standardized processes.

Question 3

True / False

A major difference between job order costing and process costing is the treatment of nonmanufacturing costs.

Answer 3

FALSE

In both job order costing and process costing, nonmanufacturing costs are expensed in the period in which they are incurred.

Question 4

True / False

A separate Work in Process Inventory account is used in process costing for each major production process.

Answer 4

TRUE

In process costing, there will be a separate Work in Process Inventory account for each of the major processes.

Question 5

True / False

Process costing does not use a Work in Process Inventory account.

Answer 5

FALSE

In process costing, there will be a separate Work in Process Inventory account for each of the major processes

Question 6

True / False

Process costing often combines direct materials and direct labor into a single category called conversion costs.

Answer 6

FALSE

In process costing, direct labor and manufacturing overhead are often combined into a single category called conversion costs.

Question 7

True / False

Conversion costs consist of direct labor as well as manufacturing overhead.

Answer 7

TRUE

In process costing, direct labor and manufacturing overhead are often combined into a single category called conversion costs.

Question 8

True / False

The three major categories of product costs in process costing are direct materials, conversion costs, and manufacturing overhead.

Answer 8

FALSE

The three major categories of product costs in process costing are direct materials, direct labor, and manufacturing overhead, or direct labor and manufacturing overhead can be combined into conversion costs.

Question 9

True / False

The process costing production report is used to determine how much manufacturing cost to transfer out of Finished Goods Inventory and into Cost of Goods Sold.

Answer 9

FALSE

The process costing report is used to determine how much manufacturing cost to transfer out of Work in Process Inventory and into the next processing department.

Question 10

True / False

The process costing production report can be prepared using either the weighted-average method or the last-in, first-out (LIFO) method.

Answer 10

FALSE

The process costing production report can be prepared using either the weighted-average method or the first-in, first-out (FIFO) method.

Question 11

True / False

The key difference between a process costing production report prepared using one of the two acceptable methods is how they deal with any units and costs that are in ending Work in Process Inventory.

Answer 11

FALSE

The key difference between a process costing production report prepared using one of the two acceptable methods is how they deal with any units and costs that are in beginning Work in Process Inventory.

Question 12

True / False

A process costing production report prepared using the weighted-average method is more accurate but generally more costly to prepare than one prepared using the FIFO method.

Answer 12

FALSE

A process costing production report prepared using the weighted-average method is simpler and less costly to prepare. But, a process costing production report prepared using the FIFO method is generally more accurate

Question 13

True / False

A process costing production report prepared using the weighted-average method is acceptable for external reporting purposes whereas a process costing production report prepared using the FIFO method is not acceptable for external reporting purposes.

Answer 13

FALSE

Either method of preparing a process costing production report is acceptable for external reporting (GAAP).

Question 14

True / False

The number of beginning units in process plus the number of ending units in process should equal the number of units started plus the number of units completed.

Answer 14

FALSE

The number of beginning units in process plus the number of units started should equal the number of units completed plus the number of ending units in process.

Question 15

True / False

If 1,800 units were started and there were 200 units in beginning inventory and 400 units in ending inventory, then the number of units completed is 1,600.

Answer 15

TRUE

The number of beginning units in process (200) plus the number of units started (1,800) should equal the number of units completed (1,600) plus the number of ending units in process (400).

Question 16

True / False

Equivalent units for materials may differ from the equivalent units for conversion costs.

Answer 16

TRUE

Equivalent units may differ for the two categories since their percentage of completion may differ.

Question 17

True / False

An equivalent unit is a measure used to convert costs incurred in the previous period to costs incurred in the current period

Answer 17

FALSE

An equivalent unit is a measure used to convert partially completed units into the equivalent of a full unit

Question 18

True / False

Equivalent units are calculated by multiplying the number of physical units by their percentage of completion.

Answer 18

TRUE

This is how equivalent units are calculated.

Question 19

True / False

Under the weighted-average method, the only partially completed units that need to be addressed are the units in beginning inventory.

Answer 19

FALSE

Under the weighted-average method, the only partially completed units that need to be addressed are the units in ending inventory.

Question 20

True / False

Computing equivalent units is particularly important for products that take a long time to manufacture, such as airplanes.

Answer 20

TRUE

Computing equivalent units is particularly important for products that take a long time to manufacture, such as wine that must be aged or airplanes.

Question 21

True / False

Cost per equivalent unit is calculated separately for direct materials and for conversion costs.

Answer 21

TRUE

Because equivalent units are different for direct materials and conversion costs, we must make a separate calculation for each category.

Question 22

True / False

(Beginning inventory + Current costs)/Equivalent units is the formula to calculate the cost per equivalent unit using the weighted-average method.

Answer 22

TRUE

This is the correct formula for calculating cost per equivalent unit.

Question 23

True / False

The total cost of Work in Process incurred in one department during the period must be split between costs transferred to the next department and costs transferred to Finished Goods.

Answer 23

FALSE

The total cost of Work in Process incurred during the period must be split between costs transferred to the next department and costs remaining in the current department as Work in Process Inventory.

Question 24

True / False

To reconcile the total cost of Work in Process Inventory, the costs that were in Work in Process Inventory at the beginning of the period plus any costs that were added during the current period must be accounted for.

Answer 24

TRUE

To reconcile the total cost of Work in Process Inventory, we must account for any costs that were in Work in Process Inventory at the beginning of the period plus any costs that were added during the current period.

Question 25

True / False The production report contains information about the number of physical units and equivalent units, but not their costs.

Answer 25

FALSE The production report includes information about the number of physical units, equivalent units, cost per equivalent unit, and a reconciliation of the cost of work in process.

Question 26

True / False Selling, general, and administrative costs are included on the production cost report and included as part of cost of goods manufactured.

Answer 26

FALSE Selling, general, and administrative costs are treated as period costs and expensed during the period incurred.

Question 27

True / False Under the FIFO method, the units completed during the period must be split between beginning units in process and units started and completed.

Answer 27

TRUE In FIFO, physical units are divided between beginning units in process, units started and completed, and ending units in process.

Question 28

True / False Under the FIFO method, cost per equivalent unit is calculated by dividing current period costs by equivalent units.

Answer 28

TRUE This is the formula for cost per equivalent unit under the FIFO method.

Question 29

True / False The FIFO method combines last period's costs as well as this period's costs in the calculation of unit costs.

Answer 29

FALSE The FIFO method separates the costs of beginning inventory from the costs that were incurred during the current period.

Question 30

True / False Under process costing, the amount of under- or overapplied conversion cost should be transferred to Work in Process Inventory at the end of the period.

Answer 30

FALSE Under process costing, the amount of under- or overapplied conversion cost should be transferred to Cost of Goods Sold at the end of the period.

Question 31

True / False Under process costing when the product is through the last production process, the journal entry for total manufacturing cost includes a debit to Work in Process Inventory and a credit to Finished Goods Inventory.

Answer 31

FALSE Under process costing when the product is through the last production process, the journal entry for total manufacturing cost includes a debit to Finished Goods Inventory and a credit to Work in Process Inventory.

Question 32

Which of the following is not a characteristic of process costing? A. Products are homogenous. B. Costs are traced to production processes rather than products. C. Service firms cannot use process costing. D. Processes are standardized.

Answer 32

C. Service firms cannot use process costing. Service firms can use process costing.

Question 33

Which of the following is a characteristic of process costing? A. Products are unique. B. Costs are traced to products rather than to production processes. C. It is employed by companies that use standardized processes. D. It can only be used for manufacturing firms and not used for service firms.

Answer 33

C. It is employed by companies that use standardized processes. Process costing is used by companies that produce homogeneous products or services using a series of standardized processes.

Question 34

Which of the following companies would most likely use job order costing? A. A computer memory chip manufacturer B. A sugar beet processor C. An auto body repair shop D. An oil refinery

Answer 34

C. An auto body repair shop Job order costing is used by companies that offer customized products or services, such as an auto body repair shop.

Question 35

Which of the following companies would most likely use process costing? A. A soft drink company B. A law firm C. A garden equipment manufacturer D. A home remodeling company

Answer 35

A. A soft drink company Process costing is used by companies that produce homogeneous products or services using a series of standardized processes, such as a soft drink.

Question 36

Conversion costs consist of A. all costs of production. B. raw materials and direct labor. C. direct labor and manufacturing overhead. D. raw materials and manufacturing overhead.

Answer 36

C. direct labor and manufacturing overhead. Direct labor and manufacturing overhead costs can be lumped together in a single category called conversion cost.

Question 37

Which of the following statements is true? A. A process costing system will have a single Work in Process Inventory account. B. A process costing system will have a separate Work in Process Inventory account for each of the major processes. C. A job costing system will have a separate Work in Process Inventory account for each of the major processes. D. A process costing system will have a separate Raw Materials Inventory account for each of the major processes.

Answer 37

B. A process costing system will have a separate Work in Process Inventory account for each of the major processes. In process costing, there will be a separate Work in Process Inventory account for each of the major processes the product must go through as it is being manufactured.

Question 38

Which of the following accounts will be treated differently by a process costing system than by a job order costing system? A. Raw Materials Inventory B. Work in Process Inventory C. Finished Goods Inventory D. Cost of Goods Sold

Answer 38

B. Work in Process Inventory A process costing system determines the value of Work in Process Inventory by an average cost per equivalent unit of production, while a job order costing system attaches a unique cost to each unit that passes through Work in Process Inventory.

Question 39

Which of the following statements is incorrect regarding the production costing report? A. A separate production report is prepared for each major production process on an annual basis. B. The production report provides information about the number of units and manufacturing costs that flow through a production process during an accounting period. C. The production report is used to determine how much manufacturing cost to transfer out of Work in Process Inventory and into the next processing department. D. The production report is used to value any units that are in process at the end of the accounting period.

Answer 39

A. A separate production report is prepared for each major production process on an annual basis. The production report provides information about the number of units and manufacturing costs that flow through a production process during an accounting period. It is used to determine how much manufacturing cost to transfer out of Work in Process Inventory and into the next processing department (or Finished Goods Inventory if it is the last production process) and to value any units that are in process at the end of the accounting period. A separate production report is prepared for each major production process on either a monthly or quarterly basis.

Question 40

Which of the following is not a category used to reconcile the number of physical units using the weighted average method of process costing? A. Units started B. Ending units in process C. Cost of goods sold D. Units completed

Answer 40

C. Cost of goods sold The four categories used to reconcile the number of physical units under the weighted average method of process costing are beginning units in process, units started, units completed, and ending units in process.

Question 41

To reconcile the number of physical units using the weighted average method of process costing, one must determine whether the units were: A. completed or still in process at the end of the period. B. sold or still in inventory at the end of the period. C. in the next production process or sold at the end of the period. D. using direct materials or conversion costs at the end of the period.

Answer 41

A. completed or still in process at the end of the period. One must determine whether the units were completed during the period or are still being worked on at the end of the period.

Question 42

To reconcile the number of physical units using the weighted average method of process costing, one must determine whether the units were A. in process at the beginning of the period or were completed at the beginning of the period. B. in process at the beginning of the current period or in process at the beginning of the previous period. C. in process at the beginning of the period or were sold at the beginning of the period. D. in process at the beginning of the period or were started during the period.

Answer 42

D. in process at the beginning of the period or were started during the period. One must add the number of units that were on hand at the beginning of the period to the units that were started during the current period.

Question 43

Which of the following relationships is correct? A. Beginning units in process + units started = units completed + ending units in process B. Units started = beginning units in process + units completed + ending units in process C. Units started - beginning units in process = units completed + ending units in process D. Ending units in process + beginning units in process = units started - units completed

Answer 43

A. Beginning units in process + units started = units completed + ending units in process This is the formula to reconcile the number of physical units.

Question 44

How could a firm using the weighted average method of process costing calculate how many units were worked on during a period? A. Add beginning units in process and units completed B. Add beginning units in process and ending units in process C. Add units completed and ending units in process D. Add units started and units completed

Answer 44

C. Add units completed and ending units in process The total of the units completed and those that end the period in process equals the total units worked on.

Question 45

Every unit that passes through the production process must have been counted in which category of physical units at some point? A. Beginning units in process. B. Units started. C. Ending units in process. D. Units started and completed.

Answer 45

B. Units started. Every unit must have been started at some point.

Question 46

Brody Corp uses a process costing system. Beginning inventory for January consisted of 1,300 units that were 40% completed. 13,000 units were started into the process during January. On January 31, the inventory consisted of 650 units that were 70% completed. How many units were completed during the period? A. 12,350 B. 13,650 C. 14,300 D. 14,950

Answer 46

B. 13,650 1,300 + 13,000 - 650 = 13,650.

Question 47

Braden Corp uses a process costing system. Beginning inventory for January consisted of 1,300 units that were 60% completed. 13,000 units were started into the process during January. During January, 13,650 units were completed. How many units were in ending inventory on January 31? A. 1,950 B. 1,300 C. 650 D. 130

Answer 47

C. 650 1,300 + 13,000 - 13,650 = 650.

Question 48

Bildy Corp uses a process costing system. During January, 13,000 units were started into the process, and 13,650 units were completed. On January 31, the inventory consisted of 650 units that were 70% completed. How many units were in beginning inventory on January 1? A. 0 B. 195 C. 1,105 D. 1,300

Answer 48

D. 1,300 13,650 + 650 - 13,000 = 1,300.

Question 49

Bosco Corp uses a process costing system. Beginning inventory for January consisted of 1,300 units that were 60% completed. During January, 13,650 units were completed. On January 31, the inventory consisted of 650 units that were 70% completed. How many units were started during January? A. 12,805 B. 13,000 C. 13,325 D. 14,300

Answer 49

B. 13,000 13,650 + 650 - 1,300 = 13,000.

Question 50

How could a firm using the weighted average method of process costing calculate how many units were started during a period? A. Add units completed and beginning units in process, then subtract ending units in process. B. Subtract beginning units in process from units completed, then add ending units in process. C. Add beginning units in process, units completed, and ending units in process. D. Subtract ending units in process from units completed, then add beginning units in process.

Answer 50

B. Subtract beginning units in process from units completed, then add ending units in process. Beginning units in process + units started = units completed + ending units in process. So units started = units completed + ending units in process - beginning units in process.

Question 51

A firm using process costing needs to reconcile the number of physical units in order to A. account for units that have different percentages of completion. B. determine the number of units that were started during the period. C. reconcile beginning Work in Process Inventory with ending Work in Process Inventory. D. separate physical units from the equivalent units.

Answer 51

A. account for units that have different percentages of completion. The point of reconciling physical units is to separate completed units, which are 100% complete, from units in ending work in process, which are partially complete.

Question 52

An equivalent unit is calculated by A. dividing the number of physical units by their percentage of completion. B. multiplying the number of physical units by their percentage of completion. C. dividing the number of physical units into direct materials and conversion costs. D. subtracting the number of physical units in ending Work in Process Inventory from the total number of physical units.

Answer 52

B. multiplying the number of physical units by their percentage of completion. To calculate equivalent units, multiply the number of physical units by their percentage of completion.

Question 53

Equivalent units are kept separate for what two categories? A. Direct labor and manufacturing overhead. B. Direct materials and conversion cost. C. Direct materials and indirect materials. D. Finished goods and cost of goods sold.

Answer 53

B. Direct materials and conversion cost. Direct materials and conversion costs have different percentages of completion, so equivalent units are calculated separately for each of the two categories.

Question 54

Physical units multiplied by their percentage of completion yields A. units completed and transferred out. B. beginning units in process. C. equivalent units. D. ending units in process.

Answer 54

C. equivalent units. To calculate equivalent units, we multiply the number of physical units by their percentage of completion.

Question 55

For units that are completed and transferred out in a firm that uses the weighted average method of process costing, A. the number of units that came from beginning inventory is the same as the number of units that were started during the period. B. the number of equivalent units for direct materials is the same as the number of equivalent units for conversion cost. C. the number of equivalent units is less than the number of physical units. D. the number of equivalent units is more than the number of physical units.

Answer 55

B. the number of equivalent units for direct materials is the same as the number of equivalent units for conversion cost. When units are completed and transferred out, their percentage of completion is 100% for both direct materials and conversion costs.

Question 56

For a firm that uses the weighted average method of process costing, which of the following must be true? A. Physical units must be greater than or equal to equivalent units. B. Equivalent units must be greater than or equal to physical units. C. Physical units must be equal to equivalent units. D. Physical units can be greater than or less than equivalent units.

Answer 56

A. Physical units must be greater than or equal to equivalent units. Since units can never be more than 100% complete, physical units must always be greater than or equal to equivalent units.

Question 57

Brody Corp uses a process costing system in which direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Beginning inventory for January consisted of 1,300 units that were 40% completed. 13,000 units were started into the process during January. On January 31, the inventory consisted of 650 units that were 70% completed. What would be the equivalent units for conversion cost using the weighted average method? A. 13,000 B. 13,585 C. 14,105 D. 14,300

Answer 57

C. 14,105 Completed units = 1,300 + 13,000 - 650 = 13,650. Equivalent units = (13,650 × 100%) + (650 × 70%) = 14,105.

Question 58

Brody Corp uses a process costing system in which direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Beginning inventory for January consisted of 1,300 units that were 40% completed. 13,000 units were started into the process during January. On January 31, the inventory consisted of 650 units that were 70% completed. What would be the equivalent units for direct materials cost using the weighted average method? A. 13,000 B. 13,585 C. 14,105 D. 14,300

Answer 58

D. 14,300 Completed units = 1,300 + 13,000 - 650 = 13,650. Equivalent units = (13,650 × 100%) + (650 × 100%) = 14,300.

Question 59

Frost, Inc. is a service firm that uses process costing. The firm worked on a total of 1,600 cases this month, 800 of which were completed during the period. The remaining cases were 40% complete. The firm incurred $180,000 in direct labor and manufacturing overhead costs during the period, and had $4,800 in direct labor and manufacturing costs in beginning inventory. Using the weighted average method, what was total cost per equivalent unit? A. $115.50 B. $141.43 C. $145.20 D. $165.00

Answer 59

D. $165.00 800 cases were complete, leaving 1,600 - 800 = 800 cases still in process, 40% complete. Equivalent units = (800 × 100%) + (800 × 40%) = 1,120. Cost per equivalent unit = ($180,000 + $4,800)/1,120 = $165.

Question 60

For a firm using the weighted average method of process costing, it would not be necessary to translate physical units into equivalent units if A. the FIFO method were used instead. B. direct materials were all added at the beginning of the process. C. direct labor and manufacturing overhead were combined into a single category called conversion costs. D. all units worked on during the period were completed during the period.

Answer 60

D. all units worked on during the period were completed during the period. Equivalent units = physical units × percentage of completion. If all units were 100% complete, equivalent units would equal physical units.

Question 61

For a firm that uses process costing, calculating equivalent units makes it possible to fulfill which of the following requirements of GAAP? A. Assigning an appropriate value to assets. B. Assigning an appropriate value to liabilities. C. Expensing period costs as they are incurred. D. Recognizing revenue when it is realized or realizable.

Answer 61

A. Assigning an appropriate value to assets. By converting partially completed units into equivalent units, we can assign an appropriate value to work in process inventory for financial statement reporting.

Question 62

Crador Corp uses a process costing system in which direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Beginning inventory for January consisted of 1,300 units. 13,000 units were started into the process during January. On January 31, the inventory consisted of 650 units. Equivalent units for conversion costs were 14,105. What percentage complete was the ending inventory with respect to conversion costs on January 31? A. 70% B. 80% C. 90% D. 100%

Answer 62

A. 70% Completed units = 1,300 + 13,000 - 650 = 13,650. Equivalent units = (13,650 × 100%) + (650 × percentage of completion) = 14,105. Solving for the percentage of completion, (14,105 - 13,650)/650 = 70%.

Question 63

Gatlin Manufacturing adds direct materials at the beginning of the production process, while conversion costs are incurred uniformly throughout the process. At the end of the period, equivalent units for direct materials were 250 more than equivalent units for conversion costs. 1,000 units were started during the period, and 1,000 units were also completed. Ending Work in Process Inventory was 50% complete. How many physical units were in ending Work in Process Inventory? A. 250 B. 500 C. 750 D. 1,000

Answer 63

B. 500 (100% × 1,000) + (100% × WIP) = 250 + (100% × 1,000) + (50% × WIP). WIP = 250/.5 = 500.

Question 64

Under the weighted average method of process costing, which of the following formulas is used to calculate the cost per equivalent unit? A. (Ending Inventory + Current Costs)/Physical Units B. (Beginning Inventory + Current Costs)/Physical Units C. (Ending Inventory + Current Costs)/Equivalent Units D. (Beginning Inventory + Current Costs)/Equivalent Units

Answer 64

D. (Beginning Inventory + Current Costs)/Equivalent Units To calculate cost per equivalent unit, we divide total manufacturing cost by the total number of equivalent units. The total manufacturing cost includes the cost of the units in beginning inventory plus the costs that were incurred during the current period.

Question 65

Under the weighted average method of process costing, the cost per equivalent unit is calculated for which of the following pairs of categories? A. Units sold and units in ending Finished Goods Inventory. B. Direct materials and conversion costs. C. Manufacturing costs and nonmanufacturing costs. D. Completed units and ending units in process.

Answer 65

B. Direct materials and conversion costs. Because the equivalent units are different for direct materials and conversion costs, we must make a separate calculation for each category.

Question 66

Cost per equivalent unit is kept separate for direct materials and conversion costs because A. the physical units were different for the two categories. B. the total manufacturing costs were different for the two categories. C. the equivalent units were different for the two categories. D. the ending inventories were different for the two categories.

Answer 66

C. the equivalent units were different for the two categories. Percentage completion and therefore equivalent units, are different for direct materials and conversion costs.

Question 67

Which of the following is not used in the calculation of cost per equivalent unit? A. Current manufacturing costs B. Current nonmanufacturing costs C. Equivalent units D. Beginning inventory costs

Answer 67

B. Current nonmanufacturing costs Nonmanufacturing costs are not involved in process costing. They are expensed as incurred.

Question 68

To calculate cost per equivalent unit in process costing, total manufacturing costs are divided by the total number of equivalent units. Under the weighted average method, what costs are reflected in total manufacturing costs? A. Current period costs only B. Prior period costs only C. Both current and prior period costs D. Both current period and future period costs

Answer 68

C. Both current and prior period costs Under the weighted average method, total manufacturing costs include both beginning inventory (prior period) and current costs.

Question 69

For a process costing firm, one could calculate the cost of beginning inventory in which of the following ways? A. (Equivalent units × cost per equivalent unit) - current costs B. Current costs - (equivalent units × cost per equivalent unit) C. (Current costs × cost per equivalent unit) - equivalent units D. Equivalent units × (current costs - cost per equivalent unit)

Answer 69

A. (Equivalent units × cost per equivalent unit) - current costs Cost per equivalent unit = (beginning inventory + current costs)/equivalent units, so beginning inventory = equivalent units × cost per equivalent unit - current costs.

Question 70

Kenney Co. uses process costing to account for the production of canned energy drinks. Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Equivalent units have been calculated to be 19,200 units for materials and 16,000 units for conversion costs. Beginning inventory consisted of $11,200 in materials and $6,400 in conversion costs. April costs were $57,600 for materials and $64,000 for conversion costs. Ending inventory still in process was 6,400 units (100% complete for materials, 50% for conversion). The cost per equivalent unit for conversion costs using the weighted average method would be A. $4.00 B. $4.40 C. $1.10 D. $8.70

Answer 70

B. $4.40 Cost per equivalent unit for conversion = ($6,400 + $64,000)/16,000 = $4.40.

Question 71

Kenney Co. uses process costing to account for the production of canned energy drinks. Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Equivalent units have been calculated to be 19,200 units for materials and 16,000 units for conversion costs. Beginning inventory consisted of $11,200 in materials and $6,400 in conversion costs. April costs were $57,600 for materials and $64,000 for conversion costs. Ending inventory still in process was 6,400 units (100% complete for materials, 50% for conversion). The cost per equivalent unit for materials using the weighted average method would be closest to: A. $0.9167 B. $3.0000 C. $3.5833 D. $7.2500

Answer 71

C. $3.5833 Cost per equivalent unit for materials = ($11,200 + $57,600)/19,200 = $3.5833.

Question 72

Kenney Co. uses process costing to account for the production of canned energy drinks. Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Equivalent units have been calculated to be 19,200 units for materials and 16,000 units for conversion costs. Beginning inventory consisted of $11,200 in materials and $6,400 in conversion costs. April costs were $57,600 for materials and $64,000 for conversion costs. Ending inventory still in process was 6,400 units (100% complete for materials, 50% for conversion). The total cost per unit using the weighted average method would be closest to: A. $7.9833 B. $6.9091 C. $7.0000 D. $7.2500

Answer 72

A. $7.9833 Cost per equivalent unit for conversion = ($6,400 + $64,000)/16,000 = $4.40. Cost per equivalent unit for materials = ($11,200 + $57,600)/19,200 = $3.5833. Total cost per unit = $4.40 + $3.5833 = $7.9833.

Question 73

Livingston Co. uses process costing to account for the production of elastic bands. Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Beginning inventory consisted of $14,000 in materials and $8,000 in conversion costs. April costs were $72,000 for materials and $80,000 for conversion costs. During April 8,000 units were completed. Ending in process inventory was 4,000 units (100% complete for materials, 50% for conversion). The cost per equivalent unit for conversion costs using the weighted average method would be A. $8.00 B. $8.80 C. $2.20 D. $17.40

Answer 73

B. $8.80 For materials, EUs = (8,000 × 100%) + (4,000 × 100%) = 12,000, and for conversion costs, EUs = (8,000 × 100%) + (4,000 × 50%) = 10,000. Cost per equivalent unit = ($8,000 + $80,000)/10,000 = $8.80.

Question 74

Livingston Co. uses process costing to account for the production of elastic bands. Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Beginning inventory consisted of $14,000 in materials and $8,000 in conversion costs. April costs were $72,000 for materials and $80,000 for conversion costs. During April 8,000 units were completed. Ending in process inventory was 4,000 units (100% complete for materials, 50% for conversion). The equivalent cost per unit for materials using the weighted average method would be closest to: A. $1.8333 B. $6.0000 C. $7.1667 D. $14.5000

Answer 74

C. $7.1667 EUs for materials = (8,000 × 100%) + (4,000 × 100%) = 12,000. Cost per equivalent unit for materials = ($14,000 + $72,000)/12,000 = $7.1667.

Question 75

Livingston Co. uses process costing to account for the production of elastic bands. Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Beginning inventory consisted of $14,000 in materials and $8,000 in conversion costs. April costs were $72,000 for materials and $80,000 for conversion costs. During April 8,000 units were completed. Ending in process inventory was 4,000 units (100% complete for materials, 50% for conversion). The total cost per unit using the weighted average method would be A. $15.9667 B. $13.8382 C. $14.0000 D. $14.5000

Answer 75

A. $15.9667 Equivalent units for materials = (8,000 × 100%) + (4,000 × 100%) = 12,000, and for conversion costs, (8,000 × 100%) + (4,000 × 50%) = 10,000. Cost per equivalent unit for conversion costs = ($8,000 + $80,000)/10,000 = $8.80. For materials, ($14,000 + $72,000)/12,000 = $7.1667. Total cost per unit = $8.80 + $7.1667 = $15.9667.

Question 76

Macadam Corp. uses the weighted average method of process costing. Its cost per equivalent unit for direct materials was $5.00 this period, and it had 25,000 equivalent units for direct materials. Beginning inventory costs were 25% of current costs. How much were current costs? A. $25,000 B. $75,000 C. $100,000 D. $125,000

Answer 76

C. $100,000 $5.00 = [(25% × current costs) + current costs]/25,000. Current costs = $125,000/1.25 = $100,000.

Question 77

To determine how much cost should be assigned to ending Work in Process Inventory, A. multiply costs per equivalent unit by the number of equivalent units associated with units completed. B. multiply costs per equivalent unit by the number of equivalent units associated with ending Work in Process Inventory. C. subtract cost of beginning inventory from current period costs. D. add cost of beginning inventory and current period costs.

Answer 77

B. multiply costs per equivalent unit by the number of equivalent units associated with ending Work in Process Inventory. To assign costs to ending inventory, multiply the costs per equivalent unit by the number of equivalent units calculated in Step 2 for ending inventory.

Question 78

To determine how much cost should be transferred out of Work in Process Inventory, A. multiply costs per equivalent unit by the number of equivalent units associated with units completed. B. multiply costs per equivalent unit by the number of equivalent units associated with ending inventory. C. subtract cost of beginning inventory from current period costs. D. add cost of beginning inventory and current period costs.

Answer 78

A. multiply costs per equivalent unit by the number of equivalent units associated with units completed. To assign costs to units completed and transferred out, multiply the costs per equivalent unit by the number of equivalent units calculated in Step 2 for units completed.

Question 79

Stangol Co. uses process costing to account for the production of highlighter pens. Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Cost per equivalent unit has been calculated to be $8.80 for conversion costs and $7.1667 for materials. 12,000 units were worked on during the period. Ending inventory still in process was 4,000 units (100% complete for materials, 50% for conversion). The value of ending inventory using the weighted average method would be closest to: A. $31,933.20 B. $46,266.80 C. $63,866.40 D. $130,000.00

Answer 79

B. $46,266.80 Equivalent units = (4,000 × 50%) = 2,000 for conversion costs and (4,000 × 100%) = 4,000 for materials. ($8.80 × 2,000) + ($7.1667 × 4,000) = $46,266.80.

Question 80

Stangol Co. uses process costing to account for the production of highlighter pens. Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Cost per equivalent unit has been calculated to be $8.80 for conversion costs and $7.1667 for materials. 12,000 units were worked on during the period. Ending inventory still in process was 4,000 units (100% complete for materials, 50% for conversion). The value of units completed and transferred out using the weighted average method would be closest to: A. $127,733.60 B. $130,000.00 C. $152,000.00 D. $159,666.00

Answer 80

A. $127,733.60 Completed units = 12,000 - 4,000 = 8,000 Total cost per unit = $8.80 + $7.1667 = $15.9667. Value of units completed and transferred out = $15.9667 × 8,000 = $127,733.60.

Question 81

How is the ending balance in Work in Process Inventory calculated for a firm that uses the weighted average method of process costing? A. By multiplying the costs per equivalent unit by the number of equivalent units associated with ending Work in Process Inventory. B. By subtracting the cost of goods finished and the cost of goods sold from total manufacturing costs. C. By adding the costs of the jobs still in process at the end of the period. D. By dividing total manufacturing costs by total equivalent units.

Answer 81

A. By multiplying the costs per equivalent unit by the number of equivalent units associated with ending Work in Process Inventory. To determine ending WIP, multiply the costs per equivalent unit by the number of equivalent units calculated in Step 2.

Question 82

Togo Co. uses process costing to account for the production of picture frames. Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Equivalent units have been calculated to be 12,000 units for materials and 10,000 units for conversion costs. Beginning inventory consisted of $14,000 in materials and $8,000 in conversion costs. April costs were $72,000 for materials and $80,000 for conversion costs. Ending inventory still in process was 4,000 units (100% complete for materials, 50% for conversion). The value of ending inventory using the weighted average method would be closest to: A. $31,933.60 B. $46,266.80 C. $63,866.80 D. $130,000.00

Answer 82

B. $46,266.80 Cost per equivalent unit = ($8,000 + $80,000)/10,000 = $8.80 for conversion costs and ($14,000 + $72,000)/12,000 = $7.1667 for materials. Equivalent units for ending inventory = 4,000 × 50% = 2,000 for conversion costs and 4,000 × 100% = 4,000 for materials. ($8.80 × 2,000) + ($7.1667 × 4,000) = $46,266.80.

Question 83

Hager Co. uses process costing to account for the production of bottled energy drinks. Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Equivalent units have been calculated to be 12,000 units for materials and 10,000 units for conversion costs. Beginning inventory consisted of $7,000 in materials and $4,000 in conversion costs. April costs were $36,000 for materials and $40,000 for conversion costs. Ending inventory still in process was 4,000 units (100% complete for materials, 50% for conversion). The value of units completed and transferred out using the weighted average method would be closest to: A. $63,866.40 B. $65,000.00 C. $76,000.00 D. $79,833.00

Answer 83

A. $63,866.40 Completed units = 12,000 - 4,000 = 8,000. Cost per equivalent unit for conversion costs = ($4,000 + $40,000)/10,000 = $4.40 and for materials = ($7,000 + $36,000)/12,000 = $3.5833. Total cost per unit = $4.40 + $3.5833 = $7.9833. $7.9833 × 8,000 = $63,866.40.

Question 84

TryFit Co. uses process costing to account for the production of energy food bars. Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Beginning inventory consisted of $7,000 in materials and $4,000 in conversion costs. April costs were $36,000 for materials and $40,000 for conversion costs. During April 8,000 units were completed. Ending in process inventory was 4,000 units (100% complete for materials, 50% for conversion). The value of ending inventory using the weighted average method would be closest to: A. $15,966.60 B. $23,133.20 C. $31,933.20 D. $65,000.00

Answer 84

B. $23,133.20 Equivalent units for materials = (8,000 × 100%) + (4,000 × 100%) = 12,000, and for conversion costs = (8,000 × 100%) + (4,000 × 50%) = 10,000. Cost per equivalent unit for conversion costs = ($4,000 + $40,000)/10,000 = $4.40 and for materials = ($7,000 + $36,000)/12,000 = $3.5833. Equivalent units for ending inventory = 4,000 × 50% = 2,000 for conversion costs and 4,000 × 100% = 4,000 for materials. ($4.40 × 2,000) + ($3.5833 × 4,000) = $23,133.20.

Question 85

TryFit Co. uses process costing to account for the production of energy food bars. Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Beginning inventory consisted of $7,000 in materials and $4,000 in conversion costs. April costs were $36,000 for materials and $40,000 for conversion costs. During April 8,000 units were completed. Ending in process inventory was 4,000 units (100% complete for materials, 50% for conversion). The value of units completed and transferred out using the weighted average method would be closest to: A. $63,866.40 B. $65,000.00 C. $76,000.00 D. $79,833.00

Answer 85

A. $63,866.40 Equivalent units for materials = (8,000 × 100%) + (4,000 × 100%) = 12,000, and for conversion costs = (8,000 × 100%) + (4,000 × 50%) = 10,000. Cost per equivalent unit for conversion costs = ($4,000 + $40,000)/10,000 = $4.40, and for materials = ($7,000 + $36,000)/12,000 = $3.5833. Total cost per unit = $4.40 + $3.5833 = $7.9833. Completed units = 12,000 - 4,000 = 8,000. $7.9833 × 8,000 = $63,866.40.

Question 86

Rathburn, Inc. is a service firm that uses process costing. The firm worked on a total of 1,000 cases this month, 800 of which were completed during the period. The remaining cases were 40% complete. The firm incurred $180,000 in direct labor and manufacturing overhead costs during the period, and had $4,800 in direct labor and manufacturing costs in beginning inventory. Using the weighted average method, what was the total cost of cases still in process at the end of the period? A. $16,800 B. $17,520 C. $168,000 D. $175,200

Answer 86

A. $16,800 Because Rathburn is a service firm, it does not have direct materials costs. Cases in process = 1,000 - 800 = 200. Equivalent units = (800 × 100%) + (200 × 40%) = 880. Cost per equivalent unit = ($180,000 + $4,800)/880 = $210. Cost of cases still in process = $210 × 80 = $16,800.

Question 87

Rathburn, Inc. is a service firm that uses process costing. The firm worked on a total of 1,000 cases this month, 800 of which were completed during the period. The remaining cases were 40% complete. The firm incurred $180,000 in direct labor and manufacturing overhead costs during the period, and had $4,800 in direct labor and manufacturing costs in beginning inventory. Using the weighted average method, what was the total cost of cases completed during the period? A. $16,800 B. $17,520 C. $168,000 D. $175,200

Answer 87

C. $168,000 Because Rathburn is a service firm, it does not have direct materials costs. Cases still in process = 1,000 - 800 = 200. Equivalent = (800 × 100%) + (200 × 40%) = 880. Cost per equivalent unit = ($180,000 + $4,800)/880 = $210. Cost of cases completed during the period = $210 × 800 = $168,000.

Question 88

Which of the following is not a step in preparing a production report? A. Reconcile the number of physical units worked on during the period B. Translate the physical units into equivalent units C. Trace the cost of direct materials and direct labor to each unit D. Calculate the cost per equivalent unit

Answer 88

C. Trace the cost of direct materials and direct labor to each unit The steps are: Step 1, reconcile the number of physical units worked on during the period; Step 2, translate physical units into equivalent units; Step 3, calculate the cost per equivalent unit, and Step 4, Reconcile the total cost of work in process Inventory.

Question 89

Under the FIFO method, physical units must be broken down into A. units completed and ending units in process. B. units started and completed and ending units in process. C. beginning units in process and units started and completed. D. beginning units in process, units started and completed, and ending units in process.

Answer 89

D. beginning units in process, units started and completed, and ending units in process. Physical units = beginning units in process + units started and completed + ending units in process.

Question 90

Middle Co. uses process costing to account for the production of chocolate candy bars. Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Cost per equivalent unit has been calculated to be $4.00 for conversion costs and $3.00 for materials. 3,000 units were in beginning inventory (100% complete for materials, 80% for conversion). 12,000 units were started and completed during the period. Ending inventory still in process was 6,000 units (100% complete for materials, 40% for conversion). The value of ending inventory using the FIFO method would be A. $27,600.00 B. $34,699.80 C. $47,899.80 D. $97,500.00

Answer 90

A. $27,600.00 Equivalent units for ending inventory = 6,000 × 40% = 2,400 for conversion costs and 6,000 × 100% = 6,000 for materials. ($4.00 × 2,400) + ($3.00 × 6,000) = $27,600.

Question 91

Nettle Co. uses process costing to account for the production of rubber balls. Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Equivalent units have been calculated to be 12,000 units for materials and 10,000 units for conversion costs. Beginning inventory consisted of $14,000 in materials and $8,000 in conversion costs. April costs were $72,000 for materials and $80,000 for conversion costs. Ending inventory still in process was 4,000 units (100% complete for materials, 50% for conversion). The cost per unit for conversion costs using the FIFO method would be A. $8.00 B. $8.80 C. $2.20 D. $17.40

Answer 91

A. $8.00 $80,000/10,000 = $8.00.

Question 92

Nettle Co. uses process costing to account for the production of rubber balls. Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Equivalent units have been calculated to be 12,000 units for materials and 10,000 units for conversion costs. Beginning inventory consisted of $14,000 in materials and $8,000 in conversion costs. April costs were $72,000 for materials and $80,000 for conversion costs. Ending inventory still in process was 4,000 units (100% complete for materials, 50% for conversion). The cost per unit for materials using the FIFO method would be closest to A. $1.8334 B. $6.0000 C. $7.1666 D. $14.5000

Answer 92

B. $6.0000 $72,000/12,000 = $6.0000.

Question 93

Nettle Co. uses process costing to account for the production of rubber balls. Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Equivalent units have been calculated to be 12,000 units for materials and 10,000 units for conversion costs. Beginning inventory consisted of $14,000 in materials and $8,000 in conversion costs. April costs were $72,000 for materials and $80,000 for conversion costs. Ending inventory still in process was 4,000 units (100% complete for materials, 50% for conversion). The total cost per unit using the FIFO method would be closest to A. $15.9666 B. $13.8182 C. $14.0000 D. $14.5000

Answer 93

C. $14.0000 For conversion costs, $80,000/10,000 = $8.00. For materials, $72,000/12,000 = $6.00. Total cost per unit = $8.00 + $6.00 = $14.00.

Question 94

South Corp uses a FIFO process costing system in which direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Beginning inventory for January consisted of 1,000 units that were 40% completed. 10,000 units were started into the process during January. On January 31, the inventory consisted of 500 units that were 70% completed. How many units were started and completed during the period? A. 9,500 B. 10,500 C. 11,000 D. 11,500

Answer 94

A. 9,500 Units completed = 1,000 + 10,000 - 500 = 10,500. Units started and completed = 10,500 - 1,000 = 9,500.

Question 95

Tripper Corp uses a FIFO process costing system. Beginning inventory for January consisted of 1,000 units that were 60% completed. 10,000 units were started into the process during January. During January, 9,500 units were started and completed. How many units were in ending inventory on January 31? A. 1,500 B. 1,000 C. 500 D. 100

Answer 95

C. 500 So units completed = 9,500 + 1,000 = 10,500. Ending units in process = 1,000 + 10,000 - 10,500 = 500.

Question 96

Harlow Corp uses a FIFO process costing system. Beginning inventory for January consisted of 1,000 units that were 60% completed. During January, 9,500 units were started and completed. On January 31, the inventory consisted of 500 units that were 70% completed. How many units were started during January? A. 9,850 B. 10,000 C. 10,250 D. 11,000

Answer 96

B. 10,000 Units completed = 9,500 + 1,000 = 10,500. Units started = 10,500 + 500 - 1,000 = 10,000.

Question 97

Sanger Corp uses a process costing system in which direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Beginning inventory for January consisted of 1,000 units that were 40% completed. 10,000 units were started into the process during January. On January 31, the inventory consisted of 500 units that were 70% completed. What would be the equivalent units for conversion cost using the FIFO method? A. 10,000 B. 10,450 C. 10,850 D. 11,000

Answer 97

B. 10,450 Completed units = 1,000 + 10,000 - 500 = 10,500. Units started and completed = 10,500 - 1,000 = 9,500. Equivalent units = (1,000 × 60%) + (9,500 × 100%) + (500 × 70%) = 10,450.

Question 98

Sanger Corp uses a process costing system in which direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Beginning inventory for January consisted of 1,000 units that were 40% completed. 10,000 units were started into the process during January. On January 31, the inventory consisted of 500 units that were 70% completed. What would be the equivalent units for direct materials cost using the FIFO method? A. 10,000 B. 10,450 C. 10,850 D. 11,000

Answer 98

A. 10,000 Completed units = 1,000 + 10,000 - 500 = 10,500. Units started and completed = 10,500 - 1,000 = 9,500. Equivalent units = (1,000 × 0%) + (9,500 × 100%) + (500 × 100%) = 10,000.

Question 99

Caston Corp uses a FIFO process costing system in which direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Beginning inventory for January consisted of 1,000 units that were 40% completed with respect to conversion costs. 10,000 units were started into the process during January. On January 31, the inventory consisted of 500 units. Equivalent units for conversion costs were 10,450. What percentage complete was the ending inventory on January 31 with respect to conversion costs? A. 70% B. 80% C. 90% D. 100%

Answer 99

A. 70% Completed units = 1,000 + 10,000 - 500 = 10,500. Units started and completed = 10,500 - 1,000 = 9,500. Equivalent units = (1,000 × 60%) + (9,500 × 100%) + (500 × percentage of completion) = 10,450. Solving for the percentage of completion, (10,450 - 10,100)/500 = 70%.

Question 100

Heathcoat Co. uses process costing to account for the production of canned vegetables. Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Beginning inventory consisted of $7,000 in materials and $4,000 in conversion costs. April costs were $36,000 for materials and $40,000 for conversion costs. On April 1, there were 2,000 units in beginning inventory (80% complete). During April 10,000 units were completed. Ending in process inventory was 4,000 units (100% complete for materials, 40% for conversion). The cost per equivalent unit for conversion costs using the FIFO method would be A. $4.00 B. $4.40 C. $1.10 D. $8.70

Answer 100

A. $4.00 Units started and completed = 10,000 - 2,000 - 8,000. Equivalent units for conversion costs = (2,000 × 20%) + (8,000 × 100%) + (4,000 × 40%) = 10,000. Cost per equivalent unit = $40,000/10,000 = $4.00.

Question 101

Heathcoat Co. uses process costing to account for the production of canned vegetables. Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Beginning inventory consisted of $7,000 in materials and $4,000 in conversion costs. April costs were $36,000 for materials and $40,000 for conversion costs. On April 1, there were 2,000 units in beginning inventory (80% complete). During April 10,000 units were completed. Ending in process inventory was 4,000 units (100% complete for materials, 40% for conversion). The cost per equivalent unit for materials using the FIFO method would be A. $0.9167 B. $3.0000 C. $3.5833 D. $7.2500

Answer 101

B. $3.0000 Units started and completed = 10,000 - 2,000 - 8,000. Equivalent units for materials = (2,000 × 0%) + (8,000 × 100%) + (4,000 × 100%) = 12,000. Cost per equivalent unit = $36,000/12,000 = $3.00.

Question 102

Heathcoat Co. uses process costing to account for the production of canned vegetables. Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Beginning inventory consisted of $7,000 in materials and $4,000 in conversion costs. April costs were $36,000 for materials and $40,000 for conversion costs. On April 1, there were 2,000 units in beginning inventory (80% complete). During April 10,000 units were completed. Ending in process inventory was 4,000 units (100% complete for materials, 40% for conversion). The total cost per unit using the FIFO method would be A. $7.9833 B. $6.9091 C. $7.0000 D. $7.2500

Answer 102

C. $7.0000 Units started and completed = 10,000 - 2,000 - 8,000. Equivalent units for materials = (2,000 × 0%) + (8,000 × 100%) + (4,000 × 100%) = 12,000, and for conversion costs = (2,000 × 20%) + (8,000 × 100%) + (4,000 × 40%) = 10,000. Cost per equivalent unit = $40,000/10,000 = $4.00 for conversion and $36,000/12,000 = $3.00 for materials. Total cost per unit = $4.00 + $3.00 = $7.00.

Question 103

The journal entry to record the issuance of direct material into production includes A. a debit to Raw Materials Inventory. B. a debit to Finished Goods Inventory. C. a debit to Work in Process Inventory. D. a debit to Cash.

Answer 103

C. a debit to Work in Process Inventory. When raw materials are taken out of storage and placed into production, the cost is debited to Work in Process Inventory and credited to Raw Materials Inventory.

Question 104

The journal entry to record the purchase of direct materials includes A. a debit to Raw Materials Inventory. B. a debit to Finished Goods Inventory. C. a debit to Work in Process Inventory. D. a debit to Cash.

Answer 104

A. a debit to Raw Materials Inventory. When materials are purchased, they are debited to Raw Materials Inventory. The credit is to Cash or Accounts Payable, depending on how materials were paid for.

Question 105

The journal entry to record the actual overhead costs incurred includes A. a debit to Manufacturing Overhead. B. a debit to Work in Process Inventory. C. a debit to Finished Goods Inventory. D. a debit to Cost of Goods Sold.

Answer 105

A. a debit to Manufacturing Overhead. When actual overhead costs are incurred, they are debited to the Manufacturing Overhead account. The credit would be to Cash, Payables, Prepaid Assets, or Accumulated Depreciation.

Question 106

The journal entry to record the application of overhead costs to production includes A. a debit to Manufacturing Overhead. B. a debit to Work in Process Inventory. C. a debit to Finished Goods Inventory. D. a debit to Cost of Goods Sold.

Answer 106

B. a debit to Work in Process Inventory. When overhead costs are applied, they are debited to Work in Process Inventory and credited Manufacturing Overhead.

Question 107

The journal entry to record the completion of goods includes A. a debit to Conversion Costs. B. a debit to Work in Process Inventory. C. a debit to Finished Goods Inventory. D. a debit to Cost of Goods Sold.

Answer 107

C. a debit to Finished Goods Inventory. When goods are completed, their cost is debited to Finished Goods Inventory and credited to Work in Process Inventory.

Question 108

The journal entry to record the issuance of direct material into production includes A. a credit to Raw Materials Inventory. B. a credit to Finished Goods Inventory. C. a credit to Work in Process Inventory. D. a credit to Cash.

Answer 108

A. a credit to Raw Materials Inventory. When raw materials are taken out of storage and placed into production, the cost is debited to Work in Process Inventory and credited to Raw Materials Inventory.

Question 109

The journal entry to record the purchase of direct materials for cash includes A. a credit to Raw Materials Inventory. B. a credit to Finished Goods Inventory. C. a credit to Work in Process Inventory. D. a credit to Cash.

Answer 109

D. a credit to Cash. When materials are purchased, they are debited to Raw Materials Inventory. The credit is to Cash or Accounts Payable, depending on how materials were paid for.

Question 110

The journal entry to record the sale of goods includes A. a credit to Conversion Costs. B. a credit to Work in Process Inventory. C. a credit to Finished Goods Inventory. D. a credit to Cost of Goods Sold.

Answer 110

C. a credit to Finished Goods Inventory. When goods are sold, their cost is debited to Cost of Goods Sold and credited to Finished Goods Inventory.

Question 111

The journal entry to record the application of overhead costs to production includes A. a credit to Manufacturing Overhead. B. a credit to Work in Process Inventory. C. a credit to Finished Goods Inventory. D. a credit to Cost of Goods Sold.

Answer 111

A. a credit to Manufacturing Overhead. When overhead costs are applied, they are debited to Work in Process Inventory and credited to Manufacturing Overhead.

Question 112

The journal entry to record the completion of goods includes A. a credit to Conversion Costs. B. a credit to Work in Process Inventory. C. a credit to Finished Goods Inventory. D. a credit to Cost of Goods Sold.

Answer 112

B. a credit to Work in Process Inventory. When goods are completed, their cost is debited to Finished Goods Inventory and credited to Work in Process Inventory.