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Chapter 5 Quiz 4
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1
Process costing is undertaken to:
A)discover which units are incomplete at the end of the process
B)confuse students
C)value completed units transferred out and incomplete units remaining in work in process inventories for financial reporting purposes
D)discover which units are incomplete at the commencement of the process
2
The FIFO method is a process costing method that averages the cost of opening WIP inventory and current production costs to determine the cost of completed production and closing WIP.
A)True
B)False
3
Equivalent units are all units currently in production, whether complete or partially complete:
A)True
B)False
4
Conversion costs are the costs of direct labour and manufacturing overhead incurred to convert raw material to a finished product:
A)True
B)False
5
The four steps of process costing are to analyse the physical flow of units, calculate the unit costs, calculate the equivalent units and analyse the total costs:
A)True
B)False
6

The Australian accounting standard for recording inventory, AASB 102 Inventories, allows two alternative sets of assumptions, described as:

  1. the weighted average method, and
  2. the last-in, first-out (LIFO) method
A)True
B)False
7

The total number of equivalent units is calculated as follows:

Equivalent units  equivalent units in total
completed and+ending work =equivalent
transferred out  in process units
A)True
B)False
8
The departmental production report shows the amount of production cost transferred out of the department’s work in process inventory account during the period:
A)True
B)False





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