ACCY 202: Chapter 16 Review

The managers of process operations focus on the series of repetitive processes, or steps, resulting in a noncustomized product or service.True
Manufacturers that utilize process operations produce large quantities of identical productsTrue
In a process costing system costs are measured upon completion of each job.False
Equivalent units of production refer to the number of units that could have been started and completed given the costs incurred during the period.True
A process cost summary usually does not include the number of equivalent units of production for the period.False
If a department that uses process costing starts the reporting period with 100,000 physical units that were 20% complete with respect to direct labor, the equivalent units of direct labor in Work in Process are 20,000.True
In process costing, the cost object is the process and in job costing, the cost object is a job.True
In a process operation, all labor that is used exclusively by a single production department is considered to be direct labor.True
A materials consumption report is used instead of materials requisitions in companies where materials move continuously through the manufacturing process.True
A process costing system records all factory overhead costs directly in the Work in Process Inventory accounts.False
Which of the following products is least likely to be produced in a process operations system?Custom Cabinets
Which of the following characteristics does not usually apply to process operations systems?Each unit of product is separately identifiable.
Which of the following characteristics applies to process costing but not to job order cost accounting?Equivalent units of production.
A key idea in process costing that refers to the number of units that could have been started and completed given the costs incurred during the period is known as:Equivalent units of production.
Which of the following is the best explanation for why it is necessary to calculate equivalent units of production in a process costing environment?All of the work to make a unit 100% complete and ready to move to the next stage of production or to finished goods inventory may not have been completed in a single time period.
Using conversion cost per equivalent unit is appropriate for many business that use process costing because:Direct labor and factory overhead enter the production process at the same rate.
Which of the following is not one of the four steps in accounting for production activity and assigning costs during a period under a process cost system?Determine over or underapplied overhead.
Which of the following statements is most accurate?The FIFO method computes equivalent units based only on production activity in the current period, ignoring the percentage of completion in beginning Work in Process inventory.
A process cost summary is a managerial accounting report that describes all but which of the following:The gross profit earned on the sale of products
A system of accounting in which costs are accumulated and then measured per unit at the end of a period by combining costs per equivalent unit from various departments is a:Process costing system.
A company that applies process costing is most frequently characterized by:Similar products and high production volume.
A hybrid costing system would be most appropriate when:A manufacturer is able to standardize processes while at the same time attempting to meet individual customer needs.
In a process costing system, direct material costs incurred are recorded:Directly to a Work in Process Inventory account.
The purchase of raw materials on account in a process costing system is recorded with a:Debit to Raw Materials Inventory and a credit to Accounts Payable.
When raw materials are purchased on account for use in a process costing system, the corresponding journal entry that should be recorded will include:A debit to Raw Materials Inventory.
In a process operation, the direct labor of a production department includes:All labor used exclusively by that department, even if the labor is not applied to the product itself.
To compute equivalent units of production, one must be able to reasonably estimate:The percentage of completion.