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Select the best answer.
1. The main difference between the FIFO method and the weighted average method for evaluating equivalent conversion costs is that when calculating under the FIFO method the ending inventory is not used.
B) False; the costs incurred in the period are ignorored under the FIFO method.
C) False; the beginning inventory is ignored when calculating under the weighted average method.
D) False; the beginning inventory is ignored when calculating under the FIFO method.
E) False, but for none of the reasons listed above.
2. The chief difference between process-costing and job-order costing systems is:
A) job-order costing systems accumulate production by job or batch, while process-costing systems accumulate production costs by department.
B) job-order costing is usually easier and cheaper to calculate.
C) law firms usually use process costing, while grain manufacturers use job-order costing.
D) B & C only.
E) All of the above
3. Process costing is a method that is used to account for:
A) large numbers of identical products that are produced in a continuous manufacturing environment.
B) small numbers of products that are produced in batches.
C) raw materials that are converted to finished goods.
D) finished goods that are refined and processed further.
E) large numbers of products that are produced in a nonrepetitive process.
4. Kentucky Corporation uses a process-cost accounting system. The company adds direct materials at the start of its production process; conversion cost, on the other hand, is incurred evenly throughout manufacturing. The firm has no beginning work-in-process inventory; its ending work in process is 40% complete. Which of the following sets of percentages would be used to calculate the correct number of equivalent units in the ending work-in-process inventory?
A) Materials, 100%; conversion cost, 100%.
B) Materials, 100%; conversion cost, 60%.
C) Materials, 100%; conversion cost, 40%.
D) Materials, 40%; conversion cost, 40%.
E) Materials, 40%; conversion cost, 100%.
5. Process costing would be appropriate for each of the following except:
A) custom furniture.
B) oil refining.
C) grain milling.
D) newprint production.
E) B & D.
6. Under a normal costing system costs, which type of manufacturing overhead is added to direct labor and material?
7. The weighted-average method of process costing:
A) is the key document in a process-costing system.
B) ignores the beginning inventory.
C) is a high-volume production of several product lines that differ in some ways but are nearly identical in other ways.
D) adds the costs assigned to beginning work-in-process inventory to the current period production costs.
E) none of the above.
8. As JIT (just-in-time) production and inventory management systems are installed, the amount of work-in-process inventory declines substantially.
A) True, in a JIT system, inventories are kept at a bare minimum at all stages of production.
B) True, but the reason listed in A is false.
C) False, technological advances have not allowed work-in-process inventories to decrease significantly over traditional inventory levels.
D) False, JIT forces an increase in the work-in-process inventory because the system must be adapted to fits the new situation.
E) False, but not for the reasons listed in C or D.
9. The equivalent-unit conversion cost is:
10. The equivalent-unit material cost is:
Accounting 202 Home