Question

1. A company that mass-produces identical products is best suited for a:

Multiple Choice

• Process costing system.

• Job order system.

• No cost system is required when jobs are similar.

• Production costing system.

2. A summary of work completed with related unit and total costs in a process costing system is called a(n):

Multiple Choice

• Cost requisition form.

• Production cost report.

• Equivalent units of production form.

• Summary of conversion costs.

3. Process costing systems:

Multiple Choice

• Do not have work in process accounts.

• Are used when companies mass-produce identical units.

• Track costs to individual products.

• Do not use equivalent units of production.

4.  The contribution margin ratio is computed as:

Multiple Choice

• sales divided by variable costs.

• sales minus variable costs, divided by sales.

• sales minus fixed costs, divided by sales.

• fixed costs plus variable costs, divided by sales.

5. In order to calculate break-even sales units, fixed costs are divided by the:

Multiple Choice

• contribution margin per unit.

• contribution margin percentage.

• target operating income.

• sales volume.

Answer 1

1. Option A Process costing is used when a large number of homogeneous products are to be produced.

2. Option B Product cost report includes the summary of work completed with related unit and total costs in a process costing system

3. Option B Process costing is used when a large number of identical products are to be produced

4. Option B Contribution margin ratio = (Sales - Variable costs)/Sales

5. Option A Breakeven sales units = Fixed cost/Contribution margin per unit