Question

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 11) What are the two basic types of product costing systems? A) variable costing and process costing B) FIFO costing and weighted average costing C) department costing and plant costing D) job costing and process costing 12) The system normally used to assign costs to goods that are mass-produced in a continuous sequence of steps is known as which of the following? A) process costing B) job costing C) fixed costing D) LIFO costing 13) Process costing is most likely used in which of the following industries? A) printing B) aircraft C) chemicals D) construction 14) In a process costing system, cost of work in process-department 1 is transferred where? A) to manufacturing overhead B) to work in process-department 2 C) to cost of goods sold D) to finished goods inventory 15) 15) In a process costing system, direct labor and manufacturing overhead are normally incurred when? A) at the end of the process B) evenly throughout the process C) in full at the beginning of the process D) not recorded 16) Which of the following companies would use process costing? A) DBA Management Consultants B) APlus Advertising C) PepsiCo, producer of Pepsi products D) Special Speedy Printing 17) Which of the following is unique to a process costing system? A) Work is not started on a product until an order has been received B) The costs for each process stay with that process until the products are completed and moved to Finished Goods Inventory C) Each process has its own separate Work in Process Inventory account D) Direct materials, direct labor, and manufacturing overhead are assigned to the first process only

Answer 1

Ques 11. The correct answer is D. Job Costing and Process Costing are two basic types of Product Costing System.

(a) Variable Costing is not a type of product costing system.

(b) FIFO and weighted average costing are basic types of process costing system

(c) Department costing and plant costing are not a type of Product Costing system

Ques 12. The correct answer is A. Process Costing system is used to assign costs to goods that are mass produced in a continuous sequence of steps.

(b) Job costing method is used to assign costs to a manufacturing job

(c) Fixed costs are the costs which remain constant, irrespective of the level of production

(d) LIFO costing is based on the assumption that the goods which have been purchased more recently, are sold first (Last In, First Out)

Ques 13. The correct answer is C. Process costing is used in Chemicals Industry because of the mass production in such industry

(a) Product costing is generally used in Printing Industry

(b) and (d) Aircraft and Construction industries are not known for mass production

Ques 15. The correct answer is C. In a process costing system, Direct labor and manufacturing overhead are normally incurred in full at the beginning of the process. These are the conversion costs which help in converting the raw material into finished goods.