Process Cost Accounting

Process manufacturing is the mass production of products in a sequence of steps.

True / False

In process manufacturing operations, each process is identified as a separate production department, workstation, or work centre.

True / False

The storeroom is where finished goods are stored before being shipped to customers.

True / False

A system of accounting in which the costs of each process are accumulated separately and then assigned to the units of product that pass through the process is known as a process cost accounting system.

True / False

Process cost accounting systems use the concepts of direct and indirect manufacturing costs.

True / False

When purchasing raw materials, the Raw Materials Purchases account is debited for the amount of the vendor's invoice.

True / False

The document that shows raw materials issued to a department during a period and substitutes for materials requisitions is called the process cost summary.

True / False

The wages and salaries of the manager and maintenance worker(s) of a production department in a process operation are charged to factory overhead as indirect costs.

True / False

When using a process cost accounting system, it is not necessary or practical to use a predetermined overhead rate as would be the case with job order accounting.

True / False

In a process cost accounting system, there is no overapplied or underapplied factory overhead because the actual overhead for each production department is charged directly to the individual departments.

True / False

If there is no beginning or ending goods in process inventory, it is not necessary to compute the equivalent units of production.

True / False

The notion that the cost of producing 300 units of product that are each 30% complete as to material, labour, and overhead is equal to the cost of producing and completing 90 units of product is supported by a concept known as 'equivalent units of production.'

True / False

The cost flow assumption used in the presentation of process cost accounting is FIFO; that is, units of product are accounted for on a first-in, first-out basis.

True / False

If the materials are applied in a production department only at the beginning of the process, the equivalent units for material will include only the units of material started and completed and the materials in the ending goods in process.

True / False

Very often, the equivalent units for labour are different than the equivalent units for factory overhead.

True / False

Units of product spoiled in process can have a negative impact on the cost assigned to equivalent units of production.

True / False

The number of units that would be completed if all effort during a period had been applied to units that were started and finished are called _______________ units of production.

A materials _______________ report is a document that summarizes the materials used by a department during a reporting period and replaces materials requisitions.

A _______________ accounting system assigns direct materials, direct labour, and overhead to specific manufacturing processes.

A primary managerial accounting report for a process cost accounting system is called a process _______________.

The mass production of products in a sequence of steps is called _______________ manufacturing (also called process production).

The number of units that would be completed if all effort during a period had been applied to units that were started and finished.

A document that summarizes the materials used by a department during a reporting period and replaces materials requisitions.

A system of assigning direct materials, direct labour, and overhead to specific manufacturing processes. The total costs associated with each process are then divided by the number of units passing through that process to determine the cost per equivalent unit.

A primary managerial accounting report for a process cost accounting system. The report describes the costs charged to a department, the equivalent units of production by the department, and how the costs were assigned to the output.

The mass production of products in a sequence of steps (also called process production); this means products pass through a series of sequential processes.