Skip to ContentGo to accessibility pageKeyboard shortcuts menu
OpenStax Logo

1.

LO 5.1Explain how process costing differs from job order costing.

2.

LO 5.1Would a pharmaceutical manufacturer use process or job order costing? Why?

3.

LO 5.1Which costs are assigned using the weighted-average method?

4.

LO 5.1What is the primary purpose of process costing?

5.

LO 5.2What is the difference between prime costs and conversion costs?

6.

LO 5.2Explain conversion costs using an example.

7.

LO 5.2Why are there conversion costs in both job order costing and process costing?

8.

LO 5.2What are equivalent units of production, and how are they used in process costing?

9.

LO 5.2How can there be a different number of equivalent units for materials as compared to conversion costs?

10.

LO 5.2Why is the number of equivalent units for materials only sometimes equal to the equivalent units for conversion?

11.

LO 5.3What are the four steps involved in determining the cost of inventory transferred from one department to the next and the cost of work in process inventory?

12.

LO 5.3What is the weighted-average method for computing the equivalent units of production?

13.

LO 5.4How does process costing treat the costs transferred in from another department?

14.

LO 5.4Why does each department have its own work in process inventory?

15.

LO 5.5Match each term with its description.

A. conversion costs i. total of direct material costs and direct labor costs
B. cost of goods sold ii. manufacturing costs of the items sold
C. cost of production report iii. number of units produced if each unit was produced sequentially
D. cost per equivalent unit iv. total of direct labor costs, indirect labor costs, indirect material costs, and manufacturing overhead
E. equivalent units of production v. where costs in a process cost system are reported before being applied to the product
F. manufacturing department vi. detailed listing of the total costs of the product including the value of work in process
G. prime costs vii. cost of materials or conversion for a specific department during production
H. transferred out costs viii. product of the total cost per unit and the number of units completed and transferred during the time period
16.

LO 5.5How is manufacturing overhead handled in a process cost system?

17.

LO 5.5How are predetermined overhead rates used in process costing?

Order a print copy

As an Amazon Associate we earn from qualifying purchases.

Citation/Attribution

This book may not be used in the training of large language models or otherwise be ingested into large language models or generative AI offerings without OpenStax's permission.

Want to cite, share, or modify this book? This book uses the Creative Commons Attribution-NonCommercial-ShareAlike License and you must attribute OpenStax.

Attribution information
  • If you are redistributing all or part of this book in a print format, then you must include on every physical page the following attribution:
    Access for free at https://openstax.org/books/principles-managerial-accounting/pages/1-why-it-matters
  • If you are redistributing all or part of this book in a digital format, then you must include on every digital page view the following attribution:
    Access for free at https://openstax.org/books/principles-managerial-accounting/pages/1-why-it-matters
Citation information

© Dec 13, 2023 OpenStax. Textbook content produced by OpenStax is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike License . The OpenStax name, OpenStax logo, OpenStax book covers, OpenStax CNX name, and OpenStax CNX logo are not subject to the Creative Commons license and may not be reproduced without the prior and express written consent of Rice University.