1.Process costing systems suitable for firms that produce customized products : 1841138
1.Process costing systems are suitable for firms that produce customized products in small amounts.
2.The need to distribute the cost of making the batch of units that are still in process and to units that have been completed during the period is central to process costing.
3.In a process costing system, in-process units are converted to physical units.
4.For units still in process, when using the weighted average method multiply the physical units by the percentage completion and add this amount to the units completed to obtain total equivalent units for the period.
5.One difference in job costing and process costing is that we do not need to allocate costs between completed and in-process units in a job-costing system.
6.An advantage of process costing is that all inputs are required at the beginning of the process.
7.Conversion cost includes both direct material and indirect material.
8.Typically in process costing, separate rates are computed for materials costs and for conversion costs.
9.Most process costing systems use weighted average process costs which do not distinguish between the costs from the prior period and costs incurred during the current period.
10.A process costing system can accommodate more than two cost pools by calculating a separate equivalent unit basis for each cost pool.
11.Because the predetermined rates in process costing come from company budgets, we refer to these rates as budgeted rates and to the system as a budgeted costing system.
12.LO3 – False Because the predetermined rates in process costing come from company standards, we refer to these rates as standard rates and to the system as a standard costing system.An advantage of standard process costing is that it is cost effective and relatively simple to compute standard costs.
13.A firm should employ standard costing only in those production environments where a firm makes similar or identical units in large quantities.
14.Standard costing is simple to adapt to a job shop environment where each job is unique.
15.To apply a standard process costing system, we use the standards for materials, labor and overhead to value Cost of Goods Manufactured and Work In Process.