Exam 21: Process Costing

The last department in a production process shows the following information at the end of the period: How many units have been transferred out to finished goods during the period?

Companies often use a combination of a process cost and a job order cost system, called operations costing.

For the Assembly Department, unit materials cost is $8 and unit conversion cost is $12. If there are 8,000 units in ending work in process 75% complete as to conversion costs, the costs to be assigned to the inventory are

In process cost accounting, manufacturing costs are summarized on a

In the month of April, a department had 500 units in the beginning work in process inventory that were 60% complete. These units had $30,000 of materials costs and $22,500 of conversion costs. Materials are added at the beginning of the process and conversion costs are added uniformly throughout the process. During April, 10,000 units were completed and transferred to the finished goods inventory and there were 2,000 units that were 25% complete in the ending work in process inventory on April 30. During April, manufacturing costs charged to the department were: Materials $690,000; Conversion costs $765,000. The cost assigned to the units transferred to finished goods during April was

Hardy Company manufactures a single product by a continuous process, involving two production departments. The records indicate that $120,000 of direct materials were issued to and $200,000 of direct labor was incurred by Department 1 in the manufacture of the product. The factory overhead rate is $20 per machine hour; machine hours were 5,000 in Department 1. Work in process in the department at the beginning of the period totaled $35,000; and work in process at the end of the period was $25,000. Instructions Prepare entries to record (a) The flow of costs into Department 1 for (1) direct materials (2) direct labor (3) overhead (b) The transfer of production costs to Department 2.

The Finishing Department of Edwards Manufacturing has the following production and cost data for July: 1. Transferred out, 3,000 units. 2. Started 2,000 units that are 40% completed at July 31. 3. Materials added, $30,000; conversion costs incurred, $19,000. Materials are entered at the beginning of the process. Conversion costs are incurred uniformly during the process. Instructions (a) Compute the equivalent units of production for materials and conversion costs for the month of July. (b) Compute unit costs and prepare a cost reconciliation schedule.

Maisley Manufacturing decided to analyze certain costs for June of the current year. Units started into production equaled 28,000 and ending work in process equaled 4,000. With no beginning work in process inventory, how much is the conversion cost per unit if ending work in process was 25% complete and total conversion costs equaled $70,000?

A process cost accounting system is most appropriate when

Equivalent units are calculated by

Materials costs of $600,000 and conversion costs of $765,000 were charged to a processing department in the month of September. Materials are added at the beginning of the process, while conversion costs are incurred uniformly throughout the process. There were no units in beginning work in process, 20,000 units were started into production in September, and there were 5,000 units in ending work in process that were 40% complete at the end of September. What was the total amount of manufacturing costs assigned to those units that were completed and transferred out of the process in September?

The Kirkland Department of Delta Manufacturing began the month of December with beginning work in process of 4,000 units that are 100% complete as to materials and 30% complete as to conversion costs. Units transferred out are 10,000 units. Ending work in process contains 3,000 units that are 100% complete as to materials and 60% complete as to conversion costs. Instructions Compute the equivalent units of production for materials and conversion costs for the month of December.

Lutz Manufacturing Company produces a product in two departments: (1) Mixing and (2) Finishing. The company uses a process cost accounting system. (a) Purchased raw materials for $50,000 on account. (b) Raw materials requisitioned for production were: (c) Incurred labor costs of $64,000. (d) Factory labor used: (e) Manufacturing overhead is applied to the product based on machine hours used in each department: Mixing department-400 machine hours at $30 per machine hour. Finishing department-500 machine hours at $20 per machine hour. (f) Units costing $56,000 were completed in the Mixing Department and were transferred to the Finishing Department. (g) Units costing $60,000 were completed in the Finishing Department and were transferred to finished goods. (h) Finished goods costing $30,000 were sold on account for $45,000. Instructions Prepare the journal entries to record the preceding transactions for Lutz Manufacturing Company.

A primary driver of overhead costs in continuous manufacturing operations is _______________.

It is necessary to calculate equivalent units of production in a department because

A characteristic of products that are mass-produced in a continuous fashion is that

Total units to be accounted for less units in beginning work in process equals

One of the major benefits of JIT is the elimination of ______________ and ____________ inventory accounts.

Watts Company adds materials at the beginning of the process and conversion costs are incurred uniformly throughout the process. Instructions Complete the following calculation of equivalent units for materials and conversion costs.

There are no units in process at the beginning of the period, 1,500 units in process at the end of the period that are 40% complete, and 15,000 units transferred out during the period. Based on this information, there were 14,400 equivalent units of production during the period.