Test Bank For Managerial Accounting Stacey Whitecotton 4th Edition

Test Bank For Managerial Accounting Stacey Whitecotton 4th Edition

Managerial Accounting, 4e (Whitecotton)

Chapter 3   Process Costing

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

Answer:  TRUE

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

Difficulty: 1 Easy

Topic:  Basic Concepts in Process Costing

Learning Objective:  03-01 Describe the key features of a process costing system.

Bloom’s:  Remember

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

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

Answer:  FALSE

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

Difficulty: 1 Easy

Topic:  Flow of Costs in Process Costing

Learning Objective:  03-01 Describe the key features of a process costing system.

Bloom’s:  Remember

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

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

Answer:  TRUE

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

Difficulty: 1 Easy

Topic:  Flow of Costs in Process Costing

Learning Objective:  03-01 Describe the key features of a process costing system.

Bloom’s:  Remember

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

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

Answer:  FALSE

Explanation:  In process costing, direct labor and manufacturing overhead (not direct materials) are often combined into a single category called conversion costs.

Difficulty: 1 Easy

Topic:  Flow of Costs in Process Costing

Learning Objective:  03-01 Describe the key features of a process costing system.

Bloom’s:  Remember

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

5) 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:  FALSE

Explanation:  The process costing report is used to determine how much manufacturing cost to transfer out of Work in Process Inventory (not finished goods) and into the next processing department (or Finished Goods Inventory if it is the last production process).

Difficulty: 1 Easy

Topic:  Process Costing Production Report

Learning Objective:  03-01 Describe the key features of a process costing system.

Bloom’s:  Understand

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

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

Answer:  FALSE

Explanation:  The process costing production report can be prepared using either the weighted-average method or the first-in, first-out (FIFO) method (not the LIFO method).

Difficulty: 1 Easy

Topic:  Process Costing Production Report

Learning Objective:  03-01 Describe the key features of a process costing system.

Bloom’s:  Remember

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation

7) 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:  FALSE

Explanation:  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 the beginning Work in Process Inventory.

Difficulty: 2 Medium

Topic:  Process Costing Production Report

Learning Objective:  03-01 Describe the key features of a process costing system.

Bloom’s:  Understand

AACSB:  Reflective Thinking

Accessibility:  Keyboard Navigation