Which of the following statements is false? The cost of rework on defective units, if
A. abnormal, should be assigned to a loss account.
B. normal and if actual costs are used, should be assigned to material, labor and overhead costs of the good production.
C. normal and if standard costs are used, should be considered when developing the overhead application rate.
D. abnormal, should be prorated among Work In Process, Finished Goods, and Cost of Goods Sold.
CHAPTER 6
PROCESS COSTING
MULTIPLE CHOICE
1.Which cost accumulation procedure is most applicable in continuous mass-production
manufacturing environments?
a.standard
b.actual
c.process
d.job order
ANSWER:c EASY
2.Process costing is used in companies that
a.engage in road and bridge construction.
b.produce sailboats made to customer specifications.
c.produce bricks for sale to the public.
d.construct houses according to customer plans.
ANSWER:c EASY
3.A producer of ________ would not use a process costing system.
a.gasoline
b.potato chips
c.blank videotapes
d.stained glass windows
ANSWER:d EASY
4.A process costing system is used by a company that
a.produces heterogeneous products.
b.produces items by special request of customers.
c.produces homogeneous products.
d.accumulates costs by job.
ANSWER:c EASY
6–1
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