1. Why does a process costing system use multiple Work in Process Inventory accounts while a job costing system uses only one Work in Process Inventory account?

2. Give the entries (accounts only) to record: (a) purchase of materials on account; (b) incurrence of labor; (c) incurrence of overhead; (d) requisition of materials and assignment of labor and overhead to Work in Process Inventory--Department A (make one compound entry for this); (e) transfer of cost of work in process inventory from Department A to Department B; (f) transfer of cost of completed units to finished goods; (g) cost of goods sold.

3. What is an equivalent unit? Give examples. Why is it necessary to use equivalent units in process costing?

4. What are the two main inventory methods used in process costing? What are the differences between these methods?

5. Is it possible to have underapplied or overapplied manufacturing overhead in a process costing system? Why or why not?