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Chapter 6—Process Costing TRUE/FALSE 1.Process costing is most appropriate when manufacturing large batches of homogenous products. ANS:T 2.Conversion costs include all manufacturing costs other than direct materials ANS:T 3.Equivalent units are computed to assign costs to partially completed units ANS:T 4.The weighted average method combines beginning inventory and current production to compute cost per unit of production. ANS:T 5.The FIFO method combines beginning inventory and current production to compute cost per unit of production. ANS:F 6.The weighted average method separates beginning inventory and current production to compute cost per unit of production. ANS:F 7.The FIFO method separates beginning inventory and current production to compute cost per unit of production. ANS:T 8.The numerator in the formula for equivalent units includes all beginning inventory costs when using the weighted average costing assumption. ANS: T,6-3 9.The numerator in the formula for equivalent units includes all beginning inventory costs when using the FIFO costing assumption. ANS:F,6-4 10.The weighted average costing method assumes that units in beginning inventory are the first units transferred. ANS:F 11.The FIFO costing method assumes that units in beginning inventory are the first units transferred. Transferred-in costs are costs accumulated during the upstream production processes within a company. Transferred-in costs are the costs accumulated by the product at any given point in production. They are "transferred in" to the new business department that receives the partially finished product and is responsible for continuing the production process. Transferred-in costs combine manufacturing costs by the various departments and
production processes. How Transferred-In Costs WorkTransferred-in costs are more often used in cost accounting for companies that produce continuous similar units through a series of operations such as petroleum, chemical, textile, and food processing companies. Example of Transferred-In CostsIf department A is responsible for starting a widget, and department B is responsible for finishing the widget, the costs incurred during production in department A would be "transferred-in costs" for department B who is responsible for continuing the production process. Transferred-in cost is also referred to as the accumulated cost of a product when it first arrives in the production department. The unit cost of a product is determined by dividing the total costs charged to the production department by the output of that department. What are transferred in costs are in a process cost system?Transferred-in costs are the costs accumulated by the product at any given point in production. They are "transferred in" to the new business department that receives the partially finished product and is responsible for continuing the production process.
What is the treatment of transferred in goods in a process costing system?Transferred-in goods are treated as if they are a separate material category that is added at the beginning of the process for the equivalent units and unit cost computations. The transferred-in units have 100% of the work and costs of the prior process.
When should process costing techniques used in assigning costs to products?Process costing is used when there is mass production of similar products, where the costs associated with individual units of output cannot be differentiated from each other. In other words, the cost of each product produced is assumed to be the same as the cost of every other product.
Are transferred in costs always 100% complete?Transferred in costs are accounting for as direct materials, direct labor and overhead. Units are always 100% complete for transferred in costs.
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In a production cost report using process costing, transferred-in costs are treated as if they are
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