Question

1. A process cost accounting system is most appropriate when

A. a variety of different products are produced, each one requiring different types of materials, labor, and overhead.

B.the focus of attention is on a particular job or order.

c. similar products are mass-produced.

D. Individual products are custom made to the specification of customers

2.A characteristic of products that are mass-produced in a continuous fashion is that

A. the products are identical or very similar in nature.

B. they are grouped in batches.

C. they are produced at the time an order is received.

D. their costs are accumulated on job cost sheets.

3. A process cost system would be used for all of the following products except

a. chemicals.

b. computer chips.

c. motion pictures.

d. soft drinks.

In a process cost system,

A		a Work in Process account is maintained for each product.
B		a materials requisition must identify the job on which the materials will be used.
C		a Work in Process account is maintained for each process.
D		one Work in Process account is maintained for all the processes, similar to a job order cost system.

In process cost accounting, manufacturing costs are summarized on a

A		job order cost sheet.
B		process order cost sheet.
C		production cost report.
D		manufacturing cost sheet.

Which of the following manufacturing cost elements occurs in a process cost system?

A		Direct materials.
B		Direct labor.
C		Manufacturing overhead.
D		All of these.

Adamson Manufacturing is trying to determine the equivalent units for conversion costs with 5,000 units of ending work in process at 80% completion and 14,000 physical units. There are no beginning units in the department. Conversion costs occur evenly throughout the entire production period. What are the equivalent units for conversion costs for the current period?

a		19,000.
b		18,000.
c		4,000.
d		13,000.

Answer 1

1. c) When similar products are mass produced as process costing deals with the product in huge quantity.

2. a) Products are identical or similar in nature as this deals with the process, we take example of textile industry, in breif first process is spinning, then weaving, then finished product. Product at different process is in similar nature

3. c) motion pictures, process costing suitable for industries where the operations or process are in sequence, this is not possible in motion picture industry

4. a) a work in process account is maintained for each product as for each and every process different separate account is maintained

5. c) production cost report as it maintains cost incurred and production altogether at each process

6. d) All of these as direct material cost, labour cost and overhead cost are incurred for each process

7.

Beginning inventory - Nil

Add- Completed Physical units - 14,000

Less - Transfer (balancing figure - 9000

Ending Inventory = 5,000 ( 80% complete)

equivalent units for conversion costs for the current period = 9000 + 80% of 5000 = 13000

option D is right

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