Question

Question #1 Which of the following statements is true? A. A manufacturer of paper would ordinarily use process costing rather than job-order costing. B The output of a processing department must be homogeneous in order to use process costing, C. If a company uses a process costing system it accumulates costs by processing department rather than by job. D. All of the above are true statements. Question #2 In a process costing system, the journal entry used to record the transfer of units from Department A, a processing department, to Department B, the next processing department, includes a debit to: A. A debit to Work in Process - Department A; and a credit to Work in Process - Department B B. A debit to Work in Process - Department B; and a credit to Work in Process - Department A. C. A debit to Work in Process - Department B; and a credit to Materials. D. A debit to Finished Goods and a credit to Work in Process - Department B Question #3 Ramirez Company uses the weighted average method in its process costing system. The following data were taken from the company's accounting records: Beginning work in process inventory (100% complete as to materials; 70% complete as to conversion) Started in process during the period Ending work in process inventory (100% complete as to materials: 60% complete as to conversion) 120,000 units 360,000 units 80,000 units The equivalent units of production for conversion costs were: A. 400,000 units B. 408,000 units. C. 444,000 units. D. 448,000 units. Question #4 Dominion Company uses the weighted average method in its process costing system. The May 1 work in process inventory in a particular department consisted of 16,000 units, which were 50% complete with respect to conversion costs. The company recorded 59,000 equivalent units of production for conversion costs for May in that department. There were 12,000 units in that department's ending work in process inventory on May 31, which were 75% complete with respect to conversion costs. A total of 50,000 units were completed and transferred out of the department during the month. The number of units started during May in the department was: A. 42,000 units C. 29,000 units B. 46,000 units. D. 54,000 units

Answer 1

1)

Manufacture of paper involves several processes and the costs are accumulated to each process. The output of one process become the input for other processes, which must be homogeneous. All the statements are true.

Option D.

2)

When goods are transferred from department A to department B, department A is credited and department B is debited.

Option B.

3)

Units completed = 120,000 + 360,000 - 80,000 = 400,000

Units in ending work in process = 80,000 X 60% = 48,000

Equivalent units = 400,000 + 48,000 = 448,000

Option D.

4)

Units started = 50,000 + 12,000 - 16,000 = 46,000 units

Option B.