ch15 - CHAPTER 15 PROCESS COSTING TRUE/FALSE 1. Process...

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CHAPTER 15 PROCESS COSTING TRUE/FALSE 1. Process costing systems are suitable for firms that produce customized products in small amounts. LO1 – False Process costing systems are suitable for environments that involve mass production of like products. 2. The need to distribute the cost of making the batch of units that are still in process and to units that have been completed during the period is central to process costing. LO1 – True 3. In a process costing system, in-process units are converted to physical units. LO1 – False In a process costing system, in-process units are converted to equivalent units. 4. For units still in process, when using the weighted average method multiply the physical units by the percentage completion and add this amount to the units completed to obtain total equivalent units for the period. LO1 – True 5. One difference in job costing and process costing is that we do not need to allocate costs between completed and in-process units in a job-costing system. LO1 – True 6. An advantage of process costing is that all inputs are required at the beginning of the process. LO2 – False Processes often require inputs at different stages. 7. Conversion cost includes both direct material and indirect material. LO2 – False Conversion cost includes labor plus overhead costs. 8. Typically in process costing, separate rates are computed for materials costs and for conversion costs. LO2 – True 9. Most process costing systems use weighted average process costs which do not distinguish between the costs from the prior period and costs incurred during the current period. 15-1
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LO2 – True 10. A process costing system can accommodate more than two cost pools by calculating a separate equivalent unit basis for each cost pool. LO2 – True 11. Because the predetermined rates in process costing come from company budgets, we refer to these rates as budgeted rates and to the system as a budgeted costing system. LO3 – False Because the predetermined rates in process costing come from company standards, we refer to these rates as standard rates and to the system as a standard costing system. 15-2
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Process Costing 12. An advantage of standard process costing is that it is cost effective and relatively simple to compute standard costs. LO3 – False It takes considerable resources and effort to compute standard costs. 13. A firm should employ standard costing only in those production environments where a firm makes similar or identical units in large quantities. LO3 – True. 14. Standard costing is simple to adapt to a job shop environment where each job is unique. LO3 – False Standard costing has less appeal in a job shop environment because each job is unique and would require a fresh set of standards. 15. To apply a standard process costing system, we use the standards for materials, labor and
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ch15 - CHAPTER 15 PROCESS COSTING TRUE/FALSE 1. Process...

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