Exam 14: Process-Costing Systems

Dates 'N Things Company prints calendars. All direct materials are included at the inception of the printing process. There were 20,000 units in beginning inventory with a direct material cost of $1,000 and conversion cost of $3,760 in March. Direct materials totaled $26,000 for the month. Conversion costs were $20,000 Work- in- process records revealed that 160,000 calendars were started in March and that a total of 144,000 were completed. Ending work- in- process units are complete in respect to direct materials costs 40% complete with respect to conversion cost. The weighted- average method is used by Dates 'N Things Company. Required: a. Determine the equivalent units of conversion. b. What is the conversion costs assigned to completed calendars? c. What amount of conversion is assigned to the ending work- in- process inventory?

The overhead application rate is lower when an activity- based- costing approach is used than when a traditional approach is used because:

Wayne Company has gathered the following data for the first year of its operations: Direct materials purchased for cash \ 26,000 Direct materialsrequisitioned 20,000 Direct- labor costs incurred 40,000 Factory overhead costs incurred 35,000 Overhead applied ( 90\% of direct labor) ? Cost of goods completed 80,000 Cost of goods sold 75,000 Sales for cash 160,000 Prepare general journal entries for the above transactions.

In process costing, the journal entry to transfer completed units from Department A to Department B would include a:

is the system which applies costs to like products that are usually mass produced in continuous fashion through a series of production processes.

Firms that use activity- based costing shift costs classified from overhead to direct costs.

The entry to record the requisition of direct materials would include a debit to Materials Inventory.

Examples of potential factory overhead activity centers include receiving, testing, and packaging.

Identify which one of the following statements regarding process costing is true.

Backflush costing applies costs to products only when production is complete.

Under weighted- average process costing, the unit costs used for applying costs to products are affected by the total costs incurred to date, regardless of whether those costs were incurred during or before the current period.

Actual overhead rates are used to apply factory overhead to products.

Regardless of the nature of a company's production system, there will always be resources that are shared among different products.

The entry to record factory overhead incurred would include a credit to Factory Department Overhead Control.

The central product costing problem is how each department computes the cost of:

Journey Company produces plastic cups in a one- department process. The following information is available: Work-in- process inventory, beginning 0 Unitsstarted 60,000 Units complete and transferred out 48,000 Work-in- process inventory,ending 12,000 Direct materials added \2 40,000 Direct labor \1 65,600 Factory overhead \8 2,800 The units still in process are 100% complete with respect to direct materials and 60% complete with respect to conversion costs. The cost of the ending work- in- process inventory is:

Rippem Company manufactures generic notebooks. 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 June follow: Work- in- process inventory, June 1 Units 15,000 units Direct materials (100\% complete) \ 34,000 Conversioncosts( 30\% complete) \ 14,000 Units started in June 65,000 units Units completed in June 62,000 units Work-in-process inventory,June 30 18,000 units (100\% complete as to materials and 60\% complete as to conversioncosts) Direct materials added in June \ 285,000 Conversioncostsadded in June \ 210,000 The equivalent units for materials are:

The weighted- average method is the most popular inventory system.

Golddust Company manufactures phones in a two- department process: Assembly and Finishing. Information on the Assembly department follows: Direct materials added \ 336,000 Direct labor 460,800 Factory overhead Total costs to account for \ 1,027,200 There was no beginning inventory, and of the 80,000 units started in production, 67,200 were completed and transferred to the Finishing department, whole 12,800 units were still in process. These units had all materials added but were only 75% complete as far as conversion costs. The ending balance in Work- in- Process Inventory, Assembly is:

All manufacturing costs other than direct materials