WGU D101 UNIT 3 PROCESS COSTING PRACTICE EXAM 100
QUESTIONS WITH VERIFIED ANSWERS AND EXPLANATION
1. Which organization is most likely to use process costing?
A. A custom cabinet shop
B. A paper mill
C. A portrait studio
D. A tax law firm
2. What is the main purpose of process costing?
A. Trace costs to one unique contract
B. Eliminate manufacturing overhead
C. Assign departmental costs to many similar units
D. Forecast market prices
3. Conversion costs include which two categories?
A. Direct materials and selling expense
B. Manufacturing overhead and administrative expense
C. Direct labor and manufacturing overhead
D. Direct materials and direct labor
4. Prime costs include which two categories?
A. Direct materials and manufacturing overhead
B. Selling and administrative costs
C. Direct materials and direct labor
D. Direct labor and manufacturing overhead
5. Why can material equivalent units differ from conversion equivalent units?
A. Completed units have no equivalent units
B. Materials and conversion effort may enter production at different times
C. Materials are excluded from work in process
D. Conversion costs are always fixed
D101 Unit 3 Process Costing 100 Question Practice Exam
,6. Under weighted average, which costs enter the cost-per-equivalent-unit
numerator?
A. Only current-period costs
B. Only beginning work in process costs
C. Beginning work in process costs plus current-period costs
D. Only transferred-out costs
7. What does a production cost report summarize?
A. Only labor hours by employee
B. Physical flow, equivalent units, unit costs, and cost assignment
C. Only cash receipts and payments
D. Sales forecasts by territory
8. Why does each processing department usually have its own work in process
account?
A. Each department uses a different currency
B. Each department accumulates and transfers its own costs
C. It prevents overhead allocation
D. It turns product costs into period costs
9. How complete are transferred-out units with respect to the work performed by
the transferring department?
A. 0 percent complete
B. Equal to ending inventory completion
C. 100 percent complete
D. 50 percent complete
10. Which cost normally bypasses work in process inventory?
A. Applied manufacturing overhead
B. Direct labor used
C. Sales commissions
D. Direct materials used
11. What does an equivalent unit represent?
A. One hour of direct labor only
B. The amount of work needed to produce one complete unit
C. One physical unit regardless of completion
D. One unit sold to a customer
D101 Unit 3 Process Costing 100 Question Practice Exam
,12. If materials are added at the beginning, how complete is ending work in
process for materials?
A. 100 percent
B. The same as conversion in every case
C. 0 percent
D. 50 percent
13. If materials are added only at the end, how complete is unfinished ending work
in process for materials?
A. 25 percent
B. 0 percent
C. 50 percent
D. 100 percent
14. How are transferred-in costs viewed by a receiving department?
A. A separate cost category attached to units received
B. A reduction of raw materials
C. A cash distribution
D. A selling expense
15. Which statement correctly describes manufacturing overhead in process
costing?
A. It is excluded from conversion cost
B. It is applied to departmental work in process
C. It is recorded as sales revenue
D. It is always expensed immediately
16. Which physical-flow equation is correct?
A. Beginning work in process plus units started equals units transferred out
plus ending work in process
B. Beginning work in process minus units started equals units transferred out
C. Units started plus ending work in process equals beginning work in process
D. Equivalent units always equal units sold
D101 Unit 3 Process Costing 100 Question Practice Exam
, 17. What should total assigned costs equal at the end of a process-cost report?
A. Only current-period conversion cost
B. Sales revenue
C. Only ending work in process cost
D. Total costs to account for
18. Which method combines beginning inventory work with current-period work
when computing equivalent units?
A. Retail inventory method
B. Gross-profit method
C. Specific-identification method
D. Weighted-average method
19. What is the usual debit when direct materials are placed into a production
department?
A. Sales Revenue
B. Cost of Goods Sold
C. Finished Goods Inventory
D. Work in Process for that department
20. What is the usual credit when completed units move from the final department
to finished goods?
A. Manufacturing Overhead
B. Raw Materials Inventory
C. Sales Revenue
D. Work in Process for the final department
D101 Unit 3 Process Costing 100 Question Practice Exam
QUESTIONS WITH VERIFIED ANSWERS AND EXPLANATION
1. Which organization is most likely to use process costing?
A. A custom cabinet shop
B. A paper mill
C. A portrait studio
D. A tax law firm
2. What is the main purpose of process costing?
A. Trace costs to one unique contract
B. Eliminate manufacturing overhead
C. Assign departmental costs to many similar units
D. Forecast market prices
3. Conversion costs include which two categories?
A. Direct materials and selling expense
B. Manufacturing overhead and administrative expense
C. Direct labor and manufacturing overhead
D. Direct materials and direct labor
4. Prime costs include which two categories?
A. Direct materials and manufacturing overhead
B. Selling and administrative costs
C. Direct materials and direct labor
D. Direct labor and manufacturing overhead
5. Why can material equivalent units differ from conversion equivalent units?
A. Completed units have no equivalent units
B. Materials and conversion effort may enter production at different times
C. Materials are excluded from work in process
D. Conversion costs are always fixed
D101 Unit 3 Process Costing 100 Question Practice Exam
,6. Under weighted average, which costs enter the cost-per-equivalent-unit
numerator?
A. Only current-period costs
B. Only beginning work in process costs
C. Beginning work in process costs plus current-period costs
D. Only transferred-out costs
7. What does a production cost report summarize?
A. Only labor hours by employee
B. Physical flow, equivalent units, unit costs, and cost assignment
C. Only cash receipts and payments
D. Sales forecasts by territory
8. Why does each processing department usually have its own work in process
account?
A. Each department uses a different currency
B. Each department accumulates and transfers its own costs
C. It prevents overhead allocation
D. It turns product costs into period costs
9. How complete are transferred-out units with respect to the work performed by
the transferring department?
A. 0 percent complete
B. Equal to ending inventory completion
C. 100 percent complete
D. 50 percent complete
10. Which cost normally bypasses work in process inventory?
A. Applied manufacturing overhead
B. Direct labor used
C. Sales commissions
D. Direct materials used
11. What does an equivalent unit represent?
A. One hour of direct labor only
B. The amount of work needed to produce one complete unit
C. One physical unit regardless of completion
D. One unit sold to a customer
D101 Unit 3 Process Costing 100 Question Practice Exam
,12. If materials are added at the beginning, how complete is ending work in
process for materials?
A. 100 percent
B. The same as conversion in every case
C. 0 percent
D. 50 percent
13. If materials are added only at the end, how complete is unfinished ending work
in process for materials?
A. 25 percent
B. 0 percent
C. 50 percent
D. 100 percent
14. How are transferred-in costs viewed by a receiving department?
A. A separate cost category attached to units received
B. A reduction of raw materials
C. A cash distribution
D. A selling expense
15. Which statement correctly describes manufacturing overhead in process
costing?
A. It is excluded from conversion cost
B. It is applied to departmental work in process
C. It is recorded as sales revenue
D. It is always expensed immediately
16. Which physical-flow equation is correct?
A. Beginning work in process plus units started equals units transferred out
plus ending work in process
B. Beginning work in process minus units started equals units transferred out
C. Units started plus ending work in process equals beginning work in process
D. Equivalent units always equal units sold
D101 Unit 3 Process Costing 100 Question Practice Exam
, 17. What should total assigned costs equal at the end of a process-cost report?
A. Only current-period conversion cost
B. Sales revenue
C. Only ending work in process cost
D. Total costs to account for
18. Which method combines beginning inventory work with current-period work
when computing equivalent units?
A. Retail inventory method
B. Gross-profit method
C. Specific-identification method
D. Weighted-average method
19. What is the usual debit when direct materials are placed into a production
department?
A. Sales Revenue
B. Cost of Goods Sold
C. Finished Goods Inventory
D. Work in Process for that department
20. What is the usual credit when completed units move from the final department
to finished goods?
A. Manufacturing Overhead
B. Raw Materials Inventory
C. Sales Revenue
D. Work in Process for the final department
D101 Unit 3 Process Costing 100 Question Practice Exam
