Exam 14: Process-Costing Systems

Explain how a company accounts for factory overhead.

Equivalent units are determined by multiplying physical units by the percentage of noncompletion.

Hit or Miss Hospital uses a job- cost system for all patients who have surgery. In January, the pre- operating room (PRE- OP) and operating room (OR) had budgeted allocation bases of 2,000 nursing hours and 1,000 nursing hours, respectively. The budgeted nursing overhead charges for each department for the month were $84,000 and $66,000, respectively. The hospital floor for surgery patients had budgeted overhead costs of $600,000 and 7,500 nursing hours for the month. For patient Sid Caesar, actual hours incurred were eight and four hours, respectively, in the PRE- OP and OR rooms. Sid Caesar was in the hospital for 4 days (96 hours). Other costs related to Sid Caesar were: PRE- OP OR In- room Patient medicine \ 100 \ 250 \ 1,200 Direct nursing time 2,400 3,500 5,400 The hospital uses a budgeted overhead rate for applying overhead to patient stays. The total cost of the stay of patient Sid Caesar is:

Muhammad Company produces calendars in a one- department process. The following information is available: Directmaterialsadded \ 30,000 Directlabor \ 20,700 Factory overhead \ Work-in-process inventory,beginning - Units started Units completed and transferred out Work-in-process inventory,ending The units still in process are 100% complete with respect to direct materials and 60% complete with respect to conversion costs. The total of costs to account for is:

Hulkster Clothing had 40,000 shirts in process at May 31 (50% converted). All materials are added at the beginning of the production process. During the month, 140,000 shirts were transferred to Finished Goods Inventory. There was no beginning inventory. The equivalent units for materials costs for May using the weighted- average method are:

Honky Tonk Company manufactures tape dispensers. Its Assembly department had the following output and costs: Units started and completed 70,000 Started andin process 10,000 These units had all materials added but were only 60% complete as far as conversion costs. Direct materials costs were $480,000; conversion costs were $240,000. The unit cost of conversion costs is:

Cuckoo Company produces plastic cups in a one- department process. The following information is available: Work-in-process inventory, beginning -0- Units started 60,000 Units completed and transferred out 48,000 Work-in-process inventory, ending 12,000 The units still in process are 100% complete with respect to direct materials and 60% complete with respect to conversion costs. The equivalent units for materials are:

The first step in calculating the cost of goods transferred and cost of goods remaining in ending work- in- process inventory is to calculate unit cost.

Wolverine Company manufactures tape dispensers. Its Assembly department had the following output and costs: Units started and completed 70,000 Started and in process 10,000 These units had all materials added but were only 60% complete as far as conversion costs. Direct materials costs were $480,000; conversion costs were $240,000. The unit cost of direct materials is:

Hybrid- costing systems are blends of ideas from both job costing and process costing.

is an example of a product that would not be manufactured using process costing.

Wilma Company uses a job- order- cost system and had the following data available: Beginning direct-materials inventory \ 26,000 Beginning WIP inventory 64,000 Beginning finished-goods inventory 58,000 Direct materials purchased on account 148,000 Direct materials requisitioned 82,000 Direct-labor cost incurred 130,000 Factory overhead incurred 146,000 Cost of goods completed 292,000 Cost of goods sold 256,000 Overhead application rate 125\% (as a percent of direct- labor cost) The journal entry to record the cost of goods completed would include a:

is supported by a file of job- cost records for partially completed jobs.

would be part of the entry to record the requisition of direct materials.

Costs incurred in a previous department for items that have been received by a subsequent department are called:

The method of allocating costs to products by averaging costs over large numbers of nearly identical products

Brutus Beefcake Company manufactures tape dispensers. Its Assembly department had the following output and costs: Units started and completed 70,000 Started andin process 10,000 These units had all materials added but were only 60% completed for conversion costs. Direct materials costs were $480,000; conversion costs were $240,000. The total cost of units completed and transferred to Finishing is:

Tearjerkers Company manufactures generic greeting cards. Material is introduced at the beginning of the process in the Printing department. Conversion costs are applied uniformly throughout the process. The weighted- average method of product costing is used. Data for the Printing department for the month of September follow: $\text { Work-in-process inventory, September } 1$ Units $\quad$ 22,500 units Directmaterials(100\% complete) $\quad \mathbf{\$ 5 1 , 0 0 0}$ Conversion costs ( $30 \%$ complete) $\quad \$ 20,472$ Units started inSeptember $\quad$ 127,500 units Units completed in September $\quad$ 123,000 units Work-in-process inventory September 30 $\quad$$\quad$ 27,000 units ( $\mathbf{1 0 0} \%$ complete as to materials and $60 \%$ complete as to conversion costs) Directmaterialsadded in September $\quad\quad\$ 427,500$ Conversioncosts added in September $\quad\quad \$ 315,000$ The total cost of the ending work- in- process inventory is:

Construction and printing industries normally use job- order costing.

A process- costing method that adds the cost of (1) all work done in the current period to (2) the work done in the preceding period to the current period's beginning inventory of work in process, and divides the total by the equivalent units of work done to date