1. The managers of process operations focus on the series of repetitive processe
ID: 2709794 • Letter: 1
Question
1. The managers of process operations focus on the series of repetitive processes, or steps, resulting in a noncustomized product or service.
True
False
2. Process costing systems are used only by companies that manufacture physical products; companies that provide services do not use process costing.
T/F
3.
In process costing, the cost object is the process and in job costing, the cost object is a job.
True
False
4. The FIFO method of computing equivalent units includes the beginning inventory costs in computing the cost per equivalent unit for the current period.
T/F
5.When direct labor and overhead enter the production process at different rates, it is appropriate to use a conversion cost per equivalent unit.
T/F
6. In a process costing system, the purchase of raw materials is debited to the Raw Materials Inventory.
7. In a process costing system, companies typically end each period with only Finished Goods Inventory.
Explanation / Answer
Q1. Answer is True.
The process costing is applied where the products passed to various processes to become the final products. Such goods must be homogenous in nature.
Q2. Answer is True.
The Process costing shall not be applicable to industry whose products passes through various process and are homogenous in nature.
Q3. Answer is True.
The Process in process costing and jobs in Job costing are the respective cost objects as the cost are determined and allocated to the cost object.
Q4. Answer is False.
The cost of beginning Work in process shall not be added in the total cost while cocmputing the Cost per Equivalent units under FIFO.
Q5. Answer is True.
As the degree of completion of processing cost (i.e. labour and overheads) is same, therefore, it is appropriate to take conversion cost rather than individual cost as an element of cost.
Q6. Answer is True.
The raw material purchased is debited (added) in the raw material inventory only.
Q7. Answer is false.
The company will have a finished goods, work in process and raw material inventory for the production units, irrespective of the costing method is applicable.
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