Exam 6: Process Costing

Zuniga, Inc. uses a process costing system. During May, 1,200 units were transferred into Department 2 at a cost of $38,040. Direct materials are added at the beginning of the process. Additionally: On May 1: Beginning inventories $=250$ units, $40 \%$ complete Direct materials costs $=\$ 1,250$ Conversion costs $=\$ 1,356$ Transferred-in costs $=\$ 2,560$ During May: Direct materials costs incurred $=\$ 6,000$ Conversion costs incurred $=\$ 17,013$ On May 31: Ending Inventories $=350$ units, $20 \%$ complete Using the FIFO method, units transferred in and completed were:

In a process costing system, direct materials are added during every production process.

When standard costs are used as benchmarks, they are compared to actual costs using either weighted average or FIFO costs.

Hendrix, Inc. employs a process costing system. Direct materials are added at the beginning of the process. Here is information about July's activities: On July 1: Beginning inventories = 750 units, 60% complete Direct materials cost = $5,925 Conversion costs = $4,095 During July: 15,000 units started Direct materials added = $150,000 Conversion costs added = $83,520 On July 31: Ending inventories = 1,500 units, 40% complete Using the weighted average method, the cost of the ending work in process inventory for July was:

Once the physical units have been summarized:

Perry Company started 6,000 units during the month of March. 600 units were in the beginning work in process inventory and 400 units in the ending work in process inventory. Units completed and transferred out during March will be:

Direct materials are allocated: I. Very often at the beginning of the manufacturing process II. Uniformly throughout the manufacturing process III. At a different rate than conversion costs and, therefore, need to be valued separately for ending inventories

Process costing: I. Is used for assigning costs in mass production II. Can only be used in manufacturing III. Can be used in some service industries

Managers can only use FIFO process costing if it is reflected in the physical flow of units.

Assume there were 6,000 units in beginning work in process, 60% complete. 20,000 units were completed during the month. Ending work in process is 40% complete, which is equivalent to 3,200 units for conversion costs. Materials are added at the beginning of the process. The standard cost method is used. Assume the total conversion costs for the month are $78,400. What amount of conversion costs are attached to units in ending work in process inventory?

Macey Company uses a weighted-average process costing system. Beginning inventory consists of 6,000 units, 40% complete. Units started are 14,000, completed are 10,000, and ending inventories are 9,000 units, 70% complete. Normal spoilage is 5% of the units inspected. Direct material is added at the 75% point and spoilage inspection occurs at the 80% point. The cost per equivalent unit for materials was $1.00 and $3.00 for conversion costs. The cost of the units completed was:

In the weighted average method, cost per equivalent unit is often calculated separately for materials costs and conversion costs.

Materials are added at the beginning of the process. The beginning work in process is 30% complete. If the ending work in process is zero, the total equivalent units for direct materials for the period using FIFO are equal to:

Tong, Inc. is a manufacturing company that uses a process costing system. All direct material is added at the start of the process, and spoilage is discovered at the end. During the first period of operations 15,000 units of material were placed into production at a cost of $20 each (ignore conversion costs for this process). Ending work in process was 2,000 units, good units completed totalled 11,000 units, and normal spoilage is 15% of the units surviving inspection. Inspection takes place after the units are completed. The unit cost assigned to the good units completed is:

Zuniga, Inc. uses a process costing system. During May, 1,200 units were transferred into Department 2 at a cost of $38,040. Direct materials are added at the beginning of the process. Additionally: On May 1: Beginning inventories $=250$ units, $40 \%$ complete Direct materials costs $=\$ 1,250$ Conversion costs $=\$ 1,356$ Transferred-in costs $=\$ 2,560$ During May: Direct materials costs incurred $=\$ 6,000$ Conversion costs incurred $=\$ 17,013$ On May 31: Ending Inventories $=350$ units, $20 \%$ complete Using the weighted average method, the cost per equivalent unit for materials was:

Production costs during the current period are kept separate from that of the previous period in the:

Gholson, Inc. employs a process costing system in which direct materials are added at the beginning of the process. Direct material costs from the prior period for beginning work in process are $1,250. The current period's direct material costs total $31,500. The company began the period with 500 units, 70% complete, started 10,500 units, and finished the period with 1,000 units, 40% complete. Using the weighted average method, the direct material cost per equivalent unit for the period is:

Once equivalent unit costs have been developed:

Xeno, Inc. operates a process costing system and uses the FIFO method. Beginning work in process consists of 1,000 units, 30% complete. Ending work in process is 15% complete, and direct materials are added at the 20% point. The equivalent units of production for materials are 14,000 and for conversion costs are 18,000. The number of units started this month was:

Miramar, Inc. uses a weighted-average process costing system which recognizes normal spoilage as 5% of good output. During the current period, 14,000 units were started and 10,000 units completed. Materials are added at the beginning of the process, conversion costs occur uniformly, and the inspection point is at the 70% point. Beginning work in process was 6,000 units, 40% complete, and ending work in process 9,000 units, 80% complete. The cost per equivalent unit for material was $1.00 and for conversion costs $3.00. The cost of ending work in process was: