Exam 14: Process-Costing Systems

Paste 'em 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: The unit cost for conversion costs is:

Identify which of the following industries is most likely to use a job- order costing system.

is better suited for a single physical unit or a few like units.

"The basic distinction between job- order costing and process costing is the breadth of the denominator." Explain.

Companies that use job- order costing normally have uniform production steps.

When there is beginning work- in- process inventory, the weighted- average method of process costing must be used.

Backflush costing provides reasonably accurate product costs if:

Saints 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 Jesse Nader, actual hours incurred were eight and four hours, respectively, in the PRE- OP and OR rooms. Jesse Nader was in the hospital for 4 days (96 hours). Other costs related to Jesse Nader were: PRE-OP OR In-room Cost Cost Cost Patientmedicine \ 100 \ 250 \ 1,200 Direct nursingtime 2,400 3,500 5,400 The hospital uses a budgeted overhead rate for applying overhead to patient stays. The budgeted nursing overhead rate for OR cost is:

In a production- cost report, the total costs accounted for is equal to the cost of units completed and transferred plus the cost of:

Heaven 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 George W. Cheney, actual hours incurred were eight and four hours, respectively, in the PRE- OP and OR rooms. George W. Cheney was in the hospital for 4 days (96 hours). Other costs related to George W. Cheney 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 budgeted overhead rate for the hospital floor for surgery is:

Ultimate Warrior 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 complete and transferred out 48,000 Work-in-process inventory,ending 12,000 Direct materialsadded \ 240,000 Direct labor \ 165,600 Factory overhead \ 82,800 The units still in process are 100% complete with respect to direct materials and 60% complete with respect to conversion costs. The unit cost of conversion costs is:

is a product cost.

Matthew Company manufactures phones in a two- department process: Assembly and Finishing. Information on the Assembly department follows: Direct material s added \ 336,000 Direct labor 460,800 Factory overhead 230,200 Tot col 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, while 12,800 units were still in process. These units had all materials added but were only 75% complete as far as conversion costs. The unit cost of conversion costs is:

Bueller 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 230,200 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, while 12,800 units were still in process. These units had all materials added but were only 75% complete as far as conversion costs. The equivalent units for conversion costs are:

The equivalent of a job order in a nonprofit organization

In process costing, the journal entry to record factory overhead applied would include a:

Heartbreak Kid Company manufactures potato chips in a two- department process: Cutting and Frying. In the Cutting department 10,000 pounds were started in production and 8,400 pounds were completed and transferred to the Frying department, while 1,600 pounds were still in process. These pounds were only 75% complete as far as conversion costs. The equivalent units for conversion costs are:

Organizations using JIT production systems always have no inventories.

A debit to Direct- Materials Inventory is used to record:

Tear 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 total cost of goods transferred out of the Printing department is: