Chapter 4 Systems Design Process Costing

Chapter 4 Systems Design Process Costing - Chapter 4...

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Unformatted text preview: Chapter 4 Systems Design: Process Costing Garrison, Managerial Accounting, 12th Edition 125 True/False Questions 1. When materials are purchased in a process costing system, a work in process account is debited with the cost of the materials. Answer: False Level: Easy LO: 1 2. Any difference in the equivalent units calculated under the weighted-average and the FIFO methods is due to the units in the ending work in process inventory. Answer: False Level: Easy LO: 2,6 Appendix: 4 3. The equivalent units in beginning work in process inventory plus the equivalent units for the work done during the period equals the units transferred out plus the equivalent units in ending work in process inventory. Answer: True Level: Hard LO: 2 4. There is no difference in the unit costs computed under the weighted-average and FIFO methods of process costing if there are no beginning work in process inventories. Answer: True Level: Hard LO: 4,8 Appendix: 4 5. Under the weighted-average method of process costing, costs from the prior period are averaged with those of the current period in computing unit costs. Answer: True Level: Medium LO: 4 6. In a process costing production report, the “Cost to be accounted for” will be the same whether the weighted-average or the FIFO method is used. Answer: True Level: Medium LO: 5,9 Appendix: 4 7. Under the FIFO method of product costing, equivalent units of production consider units in the beginning inventory as if they were started and completed during the current period. Answer: False Level: Medium LO: 6 Appendix: 4 Chapter 4 Systems Design: Process Costing 126 Garrison, Managerial Accounting, 12th Edition 8. The production report of a company using the FIFO cost method likely would show goods transferred from a department in two parts--one part consisting of units from the beginning inventory completed and transferred, and the other part consisting of units that were both started and completed during the month. Answer: True Level: Medium LO: 7 Appendix: 4 9. In computing the cost per equivalent unit on the production report, costs in the beginning work in process inventory are kept separate from current period costs when the FIFO method is used. Answer: True Level: Medium LO: 8 Appendix: 4 10. A major advantage of the FIFO method is that it allows managers to judge the performance of the current period independently of the performance of the prior period. Answer: True Level: Medium LO: 9,10 Appendix: 4 11. Under a JIT inventory system, the differences between FIFO and weighted-average costing methods are reduced. Answer: True Level: Easy LO: 9,10 Appendix: 4 12. When the FIFO method is used to prepare a production report, costs to the next department are accounted for in two separate blocks....
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This note was uploaded on 01/23/2012 for the course ADMS 2510 taught by Professor Beavis during the Fall '08 term at York University.

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Chapter 4 Systems Design Process Costing - Chapter 4...

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