Exam 3: Process Costing

An equivalent unit is a measure used to convert costs incurred in the previous period to costs incurred in the current period

Every unit that passes through the production process must have been counted in which category of physical units at some point?

To determine how much cost should be assigned to ending Work in Process Inventory:

Tripper Corp. uses a FIFO process costing system. Beginning inventory for January consisted of 1,000 units that were 60% completed. 10,000 units were started into the process during January. During January, 9,500 units were started and completed. How many units were in ending inventory on January 31?

Kenney Co. uses process costing to account for the production of canned energy drinks. Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Equivalent units have been calculated to be 19,200 units for materials and 16,000 units for conversion costs. Beginning inventory consisted of $11,200 in materials and $6,400 in conversion costs. April costs were $57,600 for materials and $64,000 for conversion costs. Ending inventory still in process was 6,400 units (100% complete for materials, 50% for conversion). The total cost per unit using the weighted average method would be closest to:

The production report contains information about the number of physical units and equivalent units, but not their costs

Caston Corp. uses a FIFO process costing system in which direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Beginning inventory for January consisted of 1,000 units that were 40% completed with respect to conversion costs. 10,000 units were started into the process during January. On January 31, the inventory consisted of 500 units. Equivalent units for conversion costs were 10,450. What percentage complete was the ending inventory on January 31 with respect to conversion costs?

Nettle Co. uses process costing to account for the production of rubber balls. Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Equivalent units have been calculated to be 12,000 units for materials and 10,000 units for conversion costs. Beginning inventory consisted of $14,000 in materials and $8,000 in conversion costs. April costs were $72,000 for materials and $80,000 for conversion costs. Ending inventory still in process was 4,000 units (100% complete for materials, 50% for conversion). The cost per unit for materials using the FIFO method would be closest to:

Under process costing when the product is through the last production process, the journal entry for total manufacturing cost includes a debit to Work in Process Inventory and a credit to Finished Goods Inventory

The journal entry to record the sale of goods includes:

The journal entry to record the application of overhead costs to production includes:

Stangol Co. uses process costing to account for the production of highlighter pens. Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Cost per equivalent unit has been calculated to be $8.80 for conversion costs and $7.1667 for materials. 12,000 units were worked on during the period. Ending inventory still in process was 4,000 units (100% complete for materials, 50% for conversion). The value of units completed and transferred out using the weighted average method would be closest to:

The key difference between a process costing production report prepared using one of the two acceptable methods is how they deal with any units and costs that are in ending Work in Process Inventory

Cost per equivalent unit is kept separate for direct materials and conversion costs because:

Macadam Corp. uses the weighted average method of process costing. Its cost per equivalent unit for direct materials was $5.00 this period, and it had 25,000 equivalent units for direct materials. Beginning inventory costs were 25% of current costs. How much were current costs?

Each of the following statements describes preparing a production report using either the FIFO Method or the Weighted Average Method. List the letters that correspond to the statements that accurately describe the FIFO Method. a. Separates units in beginning inventory from those that were started during the current period. b. Combines the cost of beginning inventory with the costs that were incurred during the period. c. Averages the cost of units in beginning inventory with the costs of units that were started during the period. d. Assumes the units in beginning inventory were completed before any new units were started. e. Combines the units in beginning inventory with the units that were started during the period. f. Is the simpler method and more frequently used in practice. g. May be a less accurate method, particularly for companies that hold significant inventory. h. More closely matches the actual flow of costs in many industries.

Swan Corp. began work on 4,200 units this period. Work in Process Inventory was 700 at the beginning of the period (60% complete) and 1,400 at the end of the period (50% complete). Swan uses the weighted average method of process costing. Direct materials are added at the beginning of the process, and conversion costs are incurred evenly throughout the period. Required: Using the weighted average method: a. How many units were completed during the period? b. Determine the number of equivalent units for direct materials. c. Determine the number of equivalent units for conversion costs.

The production report includes information about the number of physical units, plus _____________ equivalent units.

For units that are completed and transferred out in a firm that uses the weighted average method of process costing:

How could a firm using the weighted average method of process costing calculate how many units were started during a period?