ACCY 202: Chapter 16 Review – Flashcards
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The managers of process operations focus on the series of repetitive processes, or steps, resulting in a noncustomized product or service.
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True
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Manufacturers that utilize process operations produce large quantities of identical products
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True
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In a process costing system costs are measured upon completion of each job.
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False
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Equivalent units of production refer to the number of units that could have been started and completed given the costs incurred during the period.
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True
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A process cost summary usually does not include the number of equivalent units of production for the period.
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False
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If a department that uses process costing starts the reporting period with 100,000 physical units that were 20% complete with respect to direct labor, the equivalent units of direct labor in Work in Process are 20,000.
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True
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In process costing, the cost object is the process and in job costing, the cost object is a job.
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True
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In a process operation, all labor that is used exclusively by a single production department is considered to be direct labor.
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True
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A materials consumption report is used instead of materials requisitions in companies where materials move continuously through the manufacturing process.
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True
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A process costing system records all factory overhead costs directly in the Work in Process Inventory accounts.
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False
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Which of the following products is least likely to be produced in a process operations system?
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Custom Cabinets
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Which of the following characteristics does not usually apply to process operations systems?
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Each unit of product is separately identifiable.
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Which of the following characteristics applies to process costing but not to job order cost accounting?
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Equivalent units of production.
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A key idea in process costing that refers to the number of units that could have been started and completed given the costs incurred during the period is known as:
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Equivalent units of production.
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Which of the following is the best explanation for why it is necessary to calculate equivalent units of production in a process costing environment?
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All of the work to make a unit 100% complete and ready to move to the next stage of production or to finished goods inventory may not have been completed in a single time period.
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Using conversion cost per equivalent unit is appropriate for many business that use process costing because:
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Direct labor and factory overhead enter the production process at the same rate.
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Which of the following is not one of the four steps in accounting for production activity and assigning costs during a period under a process cost system?
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Determine over or underapplied overhead.
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Which of the following statements is most accurate?
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The FIFO method computes equivalent units based only on production activity in the current period, ignoring the percentage of completion in beginning Work in Process inventory.
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A process cost summary is a managerial accounting report that describes all but which of the following:
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The gross profit earned on the sale of products
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A system of accounting in which costs are accumulated and then measured per unit at the end of a period by combining costs per equivalent unit from various departments is a:
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Process costing system.
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A company that applies process costing is most frequently characterized by:
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Similar products and high production volume.
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A hybrid costing system would be most appropriate when:
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A manufacturer is able to standardize processes while at the same time attempting to meet individual customer needs.
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In a process costing system, direct material costs incurred are recorded:
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Directly to a Work in Process Inventory account.
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The purchase of raw materials on account in a process costing system is recorded with a:
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Debit to Raw Materials Inventory and a credit to Accounts Payable.
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When raw materials are purchased on account for use in a process costing system, the corresponding journal entry that should be recorded will include:
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A debit to Raw Materials Inventory.
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In a process operation, the direct labor of a production department includes:
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All labor used exclusively by that department, even if the labor is not applied to the product itself.
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To compute equivalent units of production, one must be able to reasonably estimate:
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The percentage of completion.
