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Cost Accounting 101 Practice Test: Process Costing
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Process costing is a method of accounting that tracks and accumulates direct costs, and allocates indirect costs of a manufacturing process. It's often used by companies that mass produce similar products or units of output.  The five steps of process costing are: Summarize the flow of physical units Compute output in terms of equivalent units Calculate costs per equivalent unit costs Summarize total costs to account for Assign costs for finished products and work in process products  Equivalent units are notional whole units that are equivalent to the number of incomplete units... Show more
Cost Accounting 101 Practice Test: Process Costing
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25 Questions

1. Under the weighted-average method, the stage of completion of beginning work in process:
2. In the weighted-average costing method, the costs of direct materials in beginning inventory are NOT included in the cost per unit calculation since direct materials are almost always added at the start of the production process.
3. Equivalent units are calculated separately for each input.
4. When identical or similar units of products or services are mass produced, job-costing is used to calculate an average production cost for all units produced.
5. In order for a process-costing system to work, all units must be measured in the same denominations in all of the departments within the organization.
6. Which of the following manufactured products would NOT use process costing?
7. To calculate weighted-average conversion cost per equivalent unit, you multiply total conversion costs to date by total equivalent units of work done to date.
8. Examples of industries that would use process costing include the soft-drink bottling and oil industry.
9. The weighted-average process costing method does NOT distinguish between units started in the previous period but completed during the current period and units started and completed during the current period.
10. The cost of units completed can differ materially between the weighted average and the FIFO methods of process costing.
11. Work in Process-Finishing Department"
12. Costing systems that are used for the costing of like or similar units of products in mass production are called:
13. Process-costing journal entries and job-costing journal entries are similar with respect to direct materials and conversion costs.
14. Job-order costing would be most likely used by a firm that produces homogeneous products.
15. A hybrid-costing system blends characteristics from both job-costing and process costing systems.
16. The principal difference between process costing and job costing is that in job costing an averaging process is used to compute the unit costs of products or services.
17. Standard costing is NOT possible in a firm that uses process costing.
18. Weighted-average cost per equivalent unit is obtained by dividing the sum of costs for beginning work in process plus costs for work done in the current period by total equivalent units of work done to date.
19. In the computation of the cost per equivalent unit, the weighted-average method of process costing considers all the costs:
20. Managers find operation costing useful in cost management because it:
21. An operation-costing system is a hybrid-costing system applied to batches of similar, but NOT identical, products.
22. The purpose of the equivalent-unit computation is to:
23. An assumption of the FIFO process-costing method is that:
24. The weighted-average process-costing method calculates the equivalent units by:
25. How many chairs were in inventory at the beginning of the month? Conversion costs are incurred uniformly over the production cycle.

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