True or False

Enter a T or an F in the blank to indicate whether the

statement is true or false.

___ 1. A utility such as a water company would

typically use a process costing system.

___ 2. Under process costing it is important to

identify the materials, labor, and overhead costs asso-

ciated with a particular customers order just as under

job-order costing.

___ 3. In a process costing system, the production

report replaces the job cost sheet.

___ 4. Costing is more difficult in a process cost-

ing system than in a job-order costing system.

___ 5. In a process costing system, a work in

process account is maintained for each processing de-

partment.

___ 6. Since costs are accumulated by department

in a process costing system, there is no need for a fi-

nished goods inventory account.

___ 7. In process costing, costs incurred in a de-

partment are not transferred to the next department.

___ 8. If beginning work in process inventory

contains 500 units that are 60% complete, then the in-

ventory contains 300 equivalent units.