Process Costing

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Process Costing

35 Ques, 35 Marks

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1- When FIFO method is used in process costing, the opening stock costs are:...................... *

1 point

Kept separate from the costs of the new period

Added to new costs

Subtracted from the new costs

averaged with other costs to arrive at total costs

2- A popular method for calculating equivalent production is/are.................... *

1 point

FIFO

Average cost

Both (a) & (b)

Averaged with other costs to arrive at total cost

3- Which one out of the following is not an equivalent production valuation method? *

1 point

FIFO

WAC

EOQ

All of the above

4- In process costing, if an abnormal loss arises, the process account is generally..................... *

1 point

Debited with the scrap value of the abnormal loss units

Debited with the full production cost of the abnormal loss units

Credited with the scrap value of the abnormal loss units

Credited with the full production cost of the abnormal loss units

5- Process costing is an appropriate method costing when producing :........................... *

1 point

For homogeneous products like textiles, oil, or financial institutions.

For heterogeneous products like food processing and metals.

Unique products such as sail boats or custom furniture.

None of the above.

6- Differences between FIFO and weighted average methods of process costing occur when:.................... *

1 point

There is opening WIP

Costs change from the prior period

Answers (a) and (b) above

none of the above

7- When average method is used in Process Costing, the opening inventory costs are: *

1 point

Kept separate from the costs of the new period

Added to new costs

Subtracted from the new costs

Averaged with other costs to arrive at total costs

8- Which of the following is not a feature of a process production system? *

1 point

Repetitive production

High production volume

Low product flexibility

Heterogeneous products

9- Which of the following is most likely to use a process cost accounting system? *

1 point

Construction company

Print shop

Ship builder

Sugar refiner

10- Which of the following is not true regarding job order cost accounting and process cost accounting systems? *

1 point

Both assign costs by process

Both classify materials as direct and/ or indirect

Both classify labour as direct and/or indirect

Direct materials under one system might be indirect in the other

11- Under which of the following conditions will the first-in, first-out method of process costing yield the same equivalent unit costs as the weighted-average method? *

1 point

If there is no beginning inventory.

If units produced are homogeneous in nature.

If there is no ending iventory

If beginning and ending inventories are each 50% complete.

12- One characteristic of products that are mass produced in a continuous production process is that................ *

1 point

The products are identical or very similar in nature.

They are grouped in batches

They are produced at the time an order is received

Their costs are accumulated on job cost sheets

13- Which of the following cost elements occurs in a process costing system? *

1 point

Direct materials

Direct labour

Manufacturing overhead

All of the above

14- In a process costing system: ...................... *

1 point

A work-in-process account is maintained for each product.

A materials requisition identifies the job on which the materials will be used.

A work-in-process account is maintained for each process.

One work-in-process account is maintained for all manufacturing processes

15- Which of the following organizations would most likely use a process costing system? *

1 point

Gasoline refinery

Automobile retailer

Airplane manufacturer

Public accounting firm

16- If the units in the beginning Work-in-Process Inventory are greater than the units in the ending Work-in-Process Inventory, then the units transferred out are...................... *

1 point

More than the units started during the period.

Equal to the equivalent units of production.

Less than the units starts started during the period

Equal to the actual work done during the period.

17- In the computation of the manufacturing cost per equivalent unit, the weighted average method of process costing considers............................ *

1 point

Current costs only.

Current costs plus cost of beginning Work-in-Process Inventory.

Current costs plus cost of ending Work-in-Process Inventory.

Current costs less cost of beginning Work-in-Process Inventory.

18- Materials are added at the beginning of a process in a process costing system. The beginning work-in-process inventory was 30% complete as to conversion costs. Using FIFO method, the total equivalent units for material are.......................... *

1 point

Beginning inventory this periof for this process.

Units started this period in this process.

Units started this period in this process plus the beginning inventory.

Units started this period in this process plus 70% of the beginning inventory this period

19- Under which of the following conditions will the FIFO method produce the same cost of goods manufactured as the weighted-average method? *

1 point

There is no ending inventory.

There is no beginning inventory.

The beginning & ending inventories are equal.

the beginning & ending inventories are both 50% complete.

20- Predetermined manufacturing overhead rates can be used in all of the following costing systems except..................... *

1 point

Actual costing

Job costing

Process costing

Operations costing

21- When should process costing techniques be used in assigning costs to products? *

1 point

In situations where standard costing techniques should not be used

If the product is composed of mass produced homogeneous units

when production is only partially completed during the accounting period

If the product is manufactured on the basis of each order received

22- Which of the following is NOT a cost that is accumulated in work-in-process? *

1 point

Direct materials

Administrative expenses

Direct labour

Factory overheads

23- Which of the following industries uses process costing method? *

1 point

Food processing

Chemicals and drugs

Textiles

All of the above

24- Which of the following unavoidable loss? *

1 point

Standard Loss

Abnormal Loss

Actual Loss

Normal Loss

25- Where the scrap possesses some value as a waste product or as raw material for an earlier process, the value there of is.................. *

1 point

Credited to the process account

Debited to the process account

Credited to Costing P & L A/c

Credited to Cash & Bank A/c

26- Any loss caused by unexpected carelessness, accident is regarded as.................... *

1 point

Estimated Loss

Abnormal Loss

Actual Loss

Normal Loss

27- Which of the following loss can be estimated in advance on the basis of past experience or chemical data? *

1 point

Standard Loss

Abnormal Loss

Actual Loss

Normal Loss

28- In FIFO Method closing inventory is valued at.................... *

1 point

Previous period cost

Standard cost

Current cost

Average cost

29- Process A/c is credited by............... *

1 point

Cost of normal loss

Sale price of normal loss

Cost of abnormal loss

(b) & (c)

30- Which of the following is correct base for apportionment of production overheads between different processes? *

1 point

Administrative Overheads

Direct wages

Indirect wages

Any of the above

31- Which of the following is NOT debited to Process A/c? *

1 point

Selling & distribution expenses

Royalty payable

Mixing labour cost

All of the above

32- In process, 100 unis of raw materials were introduced at a cost of Rs. 1,000. The other expenditure incurred by the process was Rs. 600. Of the units introduced, 10% are normally lost in the course of manufacturing and they possess a scrap value of Rs. 3 each. The output of process was only 75 units. Value of abnormal loss=? *

1 point

Rs. 262

Rs. 1,308

Rs. 30

Rs. 267

33- A product passes from Process I and Process II. Materials issued to Process I amounted to Rs. 40,000, Labour Rs. 30,000 and overheads were Rs. 27,000. Normal loss was 3% of input. But 500 more units of output of Process I were lost due to the caelessness of workers. Only 4,350 units of output were transferred to Process II. There were no opening stocks. Input raw Material issued to Process I were 5,000 units. Cost per unit of output of Process I = ? *

1 point

Rs. 19.40 per unit

Rs. 20.40 per unit

Rs. 21.67 per unit

Rs. 20.00 per unit

34- The input to a purifying was 16,000 kg. of basic material purchased @ Rs. 1.20 per kg. Process wages amounted to Rs. 720 and overhead was applied @ 240% of the labour cost. Indirect materials cost was Rs. 336. The actual output from the process weighted 15,000 kg. Normal yield of the process in 92%. Any difference in weight between the input of basic material and output is sold @ Rs. 0.50 per kg. The process is operated under a license which provides for the payment of royalty @ 0.15 per kg. of the purified material produced. Total net royalty payable = ? *

1 point

Rs. 2,208

Rs. 2,250

Rs. 2,400

Rs. 2,292

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1 point

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