Exam 20: Process Cost Accounting

Equivalent units of production is an engineering term used to describe the process by which one company attempts to manufacture units of a product that are equivalent to the product manufactured by a competitor.

A company uses the weighted average method for inventory costing.At the start of a period the production department had 20,000 units in beginning Work in Process inventory which were 40% complete;the department completed and transferred 165,000 units.At the end of the period,22,000 units were in the ending Work in Process inventory and are 75% complete.The production department had conversion costs in the beginning goods is process inventory of $99,000 and total conversion costs added during the period are $726,825.Compute the conversion cost per equivalent unit.

Refer to the following information about the Shaping Department of the Minnesota Factory for the month of August.Minnesota Factory uses the FIFO method of inventory costing. The cost per equivalent unit of materials is $10.00,and the cost per equivalent unit of labor and overhead is $22.00.Compute the cost that should be assigned all units that were completed and transferred during August.

Companies that use a series of repetitive manufacturing processes to produce standardized products should use a process costing system.

In process costing,factory overhead incurred does not usually equal that applied,which yields either ____________________ or ___________________ overhead. Answers must appear in this order.

Luker Corporation uses a process costing system.The company had $160,500 of beginning Finished Goods Inventory on October 1.It transferred in $837,000 of goods completed during the period.The ending Finished Goods Inventory balance on October 31 was $158,200.The entry to account for the cost of goods manufactured during October is:

A company that applies process costing is most frequently characterized by:

The following is an account for a production department,showing its costs for one month: Assume that materials are added at the beginning of the production process and that direct labor and overhead are applied uniformly.If the started and completed units cost $41,850,what was the cost of completing the units in the beginning Work in Process inventory?

A process cost summary is an accounting report that describes the costs charged to each department,the equivalent units of production by each department,and determining the costs assigned to each department's output.

Kominski Company completed and transferred 90,000 units during the current period.Based on the following information,determine the cost of the goods completed during the current reporting period and journalize the transfer.

Since the process cost summary describes the activities of a production department for a specified reporting period,it does not present information about any costs incurred in prior periods.

In process costing,direct labor includes only the labor that is applied directly to individual units of product.

Williams Company computed its cost per equivalent unit for direct materials to be $2.60 and its cost per equivalent unit for conversion to be $3.75.A total of 250,000 units of product were completed and transferred out as finished goods during the month,and 36,000 of equivalent units remained unfinished at the end of the month.The amount that should be reported in ending Work in Process Inventory is:

During March,the production department of a process operations system completed and transferred to finished goods 25,000 units that were in process at the beginning of March and 110,000 units that were started and completed in March.March's beginning inventory units were 100% complete with respect to materials and 55% complete with respect to conversion.At the end of March,30,000 additional units were in process in the production department and were 100% complete with respect to materials and 30% complete with respect to conversion.Compute the number of equivalent units with respect to both materials and conversion respectively for March using the weighted-average method.

Giga Company uses a weighted average process cost system.The department started and finished 129,000 units during the current period.The ending inventory consists of 60,000 units that are 75% complete with respect to direct labor and overhead.All direct materials are added at the beginning of the process.The department incurred direct labor costs of $262,500 and overhead costs of $126,000. (a)Compute the equivalent cost per unit for direct labor. (b)Compute the equivalent cost per unit for overhead.

Wilturner Company incurs $74,000 of labor related directly to the product in the Assembly Department,$23,000 of labor not directly related to the product but related to the Assembly Department as a whole,and $10,000 of labor for services that help production in both the Assembly and Finishing departments.The journal entries to record the labor would include:

The Fabricating Department started the current month with a beginning Work in Process inventory of $10,000.During the month,it was assigned the following costs: direct materials,$76,000;direct labor,$24,000;and factory overhead,50% of direct labor cost.Also,inventory with a cost of $109,000 was transferred out of the department to the next phase in the process.The ending balance of the Work in Process Inventory account for the Fabricating Department is:

A production department is an organizational unit that has the responsibility for the complete processing of one particular product.

In process costing,indirect materials are always classified as factory overhead,even if they are linked with a specific production process or department.