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ProcessCosting:Multiple Choice Questions

1) A process cost system is highly desirable when a company is producing custom made goods.
A) True (B) False

2)All of the following are characteristics of the product of process costing except:
A) High volume (B) Different amount of direct material (C) Identical amount of direct material (D) Repetitive operation

3) If 8000 units were in beginning inventory, 24,000 units per started and 6,000 units were in the ending inventory how many units were completed and transferred out ?
A) 30,000 (B) 20,000 (C) 26,000 (D) 24,000

4) Which company would most likely use a process costing system
A) Bic Pens (B) Pespi Cola (C) Mars Candy (D) All three

5)Department X of manufacturing company works on only one product and all cost are incurred uniformly as the product goes along the assembly line. The 6,000 units in process on December 1 were 60% completed. An additional 60,000 units in process during December. At December 31 the 10,000 units in process were 80% completed. The equivalent full units of production during December amounted to:
A) 60,400 (B) 61,600 (C) 79,600 (D) 76,000

6) The computation of equivalent full units is units is generally not necessary when:
A) Beginning work in process inventories are significantly larger than ending work in process inventories (B) Beginning and ending work in process inventories differ only slightly. (C) The number of units in ending work in process exceeds the number of units completed and transferred to finish goods during the period (D) Per-unit costs become distorted as a result of not computing equivalent full units of production.

Use the following to answer question 7-10
Sadies Soup Products uses a process cost system with two processing departments: the mixing department and the canning department. Work in process inventories are reduce to zero each month. In March, the Mixing Department incurred manufacturing cost of $54,000 to mix 333,750 gallon of soup. The Canning Department incurred manufacturing cost of $9,000. A total of 180,000 cans of soup were transferred to the finished goods warehouse during the month.

7) Refer to the above information. The journal entry to record the transfer of soup out of the mixing department during March would include:
A) A debit to work in process Inventory, mixing department of $54,000. (B) A credit to work in process inventory, Canning Department of $63,000 (C) A debit to finished goods Inventory of $63,000. (D) A credit to work in process Inventory, mixing department of $54,000

8)Refer to the information above. The journal entry to record the transfer of soup out of the canning department during March would include:
A) A credit to work in process inventory, canning department of $9,000 (B) A credit to work in process inventory, canning department of $54,000.
(C)A debit to finished goods inventory of $63,000. (D) A credit to finished goods inventory, mixing department of $63,000

9) Refer to the above information. The unit cost per gallon of soup transferred to the Canning Department during March was:
A)$1.60 (B) $1.81 (C) $2.13 (D) $2.20

10)Refer to the above information above. The unit cost per can of soup transferred to the finished goods warehouse during March was:
A)$0.05 (B)$0.35 (C)$0.53 (D) $1.60

11) A company may choose to use process costing or job costing but never both simultaneously.
A)True (B) False

12) Non-value-added activities do not directly increase the worth of a product to a customer.
A) true (B) False

13) Which one of the following is not one of the basic procedures related to ABC?
A) Identify the activity. (B) Create an associated activity cost pool. (C) Transact identified cost center (D) Calculate the cost per unit of activity.

14)Of the following activities performed by a manufactures of roller blades which are the value adding ?
A) Inspection of direct materials upon receipt from supplier (B) Storage of direct materials until needed for production. (C) Transfer of direct material to appropriate points on the assembly line. (D) None of the above are value-adding activities.

15) If unit sales prices are $5 and variable cost are $3 per unit how many units would have to be sold to break even if fixed cost equal $6,000?
A)1,200 (B) 2,000 (C) 3,000 (D) 2,800

16) The dollar amount by which sales can decline before an operating loss is incurred is called the
A)Contribution margin (B) Contribution margin ratio (C) Margin of safety (D) Relevant range

17) If unit sales are $12, variable costs are $7.20 per unit and fixed cost are $24,000 what is the contribution ratio per unit.
A) 40% (B) 50% (C) 60% (D) 70%

18)Which of the following is an example of fixed cost for an airline?
A) Depreciation on the corporate headquarters (B) Fuel cost (C) Income taxes expense (D) Passengers meals

19) A company with monthly revenue of $110,000, variable cost of $45,000, and fixed cost of $35,000 has a contribution margin of:
A)$110,00 (B) $75,000 (C) $65,000 (D)$30,000

20) If the monthly sales volume required to break even is $180,000 and monthly fixed cost are $54,000 the contribution margin ratio is:
A) 30% (B) 70% (C) 42.9% (D) 333.33%

Use the following to answer question 21-23
The following data are available for product no. CK34, manufactured and sold by Ward Corporation

Maximum capacity with present facilities ..................30,000 units
Total fixed cost (per period) .......................................$664,200
Variable cost per unit......................................................$81
Sales prices per unit........................................................$135

21)Refer to the above information. The contribution margin per unit for product no.CK34 is:
A)$27 (B) $54 (C)$118 (D)$64

22 ) Refer to the above information. The number of units of CK34 that Ward must sell to break even is (rounded, if necessary):
A) 30,000 (B) 20,500 (C) 8,200 (D) 12,300

23) Refer to the above information. The dollar sales volume to produce operation income of $165,000 is:
A) $1,382,000 (B) $2,764,000 (C)$1,658,400 (D) $2,073,000

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Solution contains answers of multiple choice questions.

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