Question

TRUE/FALSE. Write 'T' if the statement is true and 'F if the statement is false. 1) Unique or custom-made goods would be accounted for by using a process costing system 2) Conversion costs include direct labor and direct materials. 3) In a process costing system, the cost per equivalent unit is computed after computing equivalent units. 4) 4) Assigning costs to units completed and to units in ending work in process inventory in a second department is a five step process. 5) Transferred-in costs are incurred in a previous process and are carried forward as part of the product's cost when it moves to the next process. 6) 6) The cost per equivalent unit must be computed for direct materials, conversion and transferred in costs in a subsequent department. 7) Equivalent units are the sum of direct materials used and direct labor incurred. 8) 8) In a process costing system, a separate work in process inventory account is maintained for each process. 9) 9) Direct materials, direct labor, and manufacturing overhead are assigned to each manufacturing process in a process costing system. 10) 10) The weighted average process costing method may be used to assign costs to a second department.

Answer 1

1) Unique or custom-made goods use a process costing system	FALSE	Unique or custom-made goods use a Job costing system
2) Conversion costs include direct labor and direct materials	FALSE	Conversion costs include direct labor and overhead expenses
3) in a process costing system, the cost per equivalent unit is computed after computing equivalent units	TRUE	Equivalent units = Number of partially completed units × Percentage of completion; Cost per Equivalent Units = Current Costs added this period ÷ Total Equivalent Units
4) Assigning costs to units completed and to units in ending work in process inventory in a second department is a five step process	TRUE	The fifth step is Allocate these costs to finished units and Work in Process units
5) Transferred-in costs are incurred in a previous process and are carried forward as part of the product's cost when it moves to the next process.	TRUE
6) The cost per equivalent unit must be computed for direct materials, conversion and transferred in costs in a subsequent department	FALSE
7) Equivalent units are the sum of direct materials used and direct labor incurred	FALSE
8) In a process costing system, a separate work in process inventory account is maintained for each process.	TRUE
9) Direct materials, direct labor and manufacturing overhead are assigned to each manufacturing process in a process costing system	TRUE
10) The weighted average process costing method may be used to assign costs to a second department.	FALSE