Process Costing Theory

MCQ-Theoretical
 
1. It is used when the products are manufactured by mass production. *
process costing
standard costing
job order costing
normal costing

 
2. Statement I- In process costing the products are heterogeneous. Statement II- In
process cost system multiple Work in Process accounts are used. *
Both statements are false
Both statements are true
Only statement II is true
Only statement I is true

 
3. Purchased materials are added in the second department of a three-department
process; this increases the number of units produced in the second department and
would always: *
cause no adjustment to the unit cost transferred in from the first department
increase total unit costs
decrease total ending work in process in inventory
change the direct labor cost percentage in the ending work in process

 
4. The restatement of incomplete units in terms of completed units is called: *
quantities produced
total production  
approximate production
equivalent production

 
5. Statement I- In process costing total costs are computed when the job is completed.
Statement II- Completed unit of one department becomes the raw materials of the next
department until the units are converted to finished products. *
Only statement I is true
Both statements are true
Only statement II is true
Both statements are false
 
6. All of the following items are shown in the production report, except: *
the percentage of completion of units transferred out
the number of units transferred out of the department during the month
the number of units that were in the process in the department at the beginning of the month
the number of units started during the month

 
7. In process cost system, costs are assigned only: *
to one work in process inventory account
to work in process inventory accounts
to work in process, finished goods, and cost of goods sold
to work in process and finished goods inventory
 
8. The journal entry to record the transfer of units from the last department to the
stockroom awaiting sale. *
Debit- Finished Goods; Credit- Work In Process
Debit- Finished Goods; Credit- Materials
Debit-Materials ; Credit- Work In Process
Debit- Work In Process; Credit- Finished Goods

 
9. In this costing procedure, the direct materials and direct labor are applied at actual
cost while manufacturing overhead is applied at a predetermined rate. *
normal costing
job order costing
process costing
standard costing

 
10. It is a system of accumulating costs of production by department or cost center. *
job order costing
process costing
normal costing
standard costing