Exam 5: Process Costing

Assigning costs to units completed and to units in ending WIP inventory in a second department is a three-step process.

A tennis ball maker gives us its data for the year: Units in ending WIP inventory were 90% complete for materials and 60% complete for conversion costs. On December 31, the total cost of the units in ending WIP would be closest to

The journal entry to record the use of direct materials in Processing Department #1 would include a credit to Raw Materials inventory.

When calculating equivalent units in a second or later processing department, all physical units should be considered 50% complete with respect to transferred-in work and costs.

There are 34,400 units started. 25,600 were completed and transferred out and the 8,800 remaining units were 60% complete for conversion costs. The total number of equivalent units for conversion costs is:

If conversion costs are added evenly throughout the production process, and the units have made it 50% of the way through the production process, then the percentage completion for conversion costs is

The "total physical units accounted for" is the sum of the units completed and transferred out during the period plus the units in beginning WIP inventory.

At Sunrise Corporation, direct materials are added at the beginning of the process and conversions costs are uniformly applied. Other details include: What is the cost per equivalent unit for conversion costs?

A pizza company produces frozen pizzas in three departments: assembly, freezing, and packaging. In assembly, crust ingredients are added at the beginning of the process. After the crust is made, the sauce, cheese, and toppings are added at the end of the process. Conversion costs are added evenly. Data for the assembly department includes: The cost per equivalent unit for cheese, sauce, and toppings would be closest to

Fun Stuff Manufacturing produces frisbees using a three-step sequential process that includes molding, coloring and finishing. When the frisbees and associated costs are transferred out of the coloring process and into the finishing process, the journal entry would include a

If all direct materials are added at the beginning of the production process, and the units have made it 50% of the way through the production process, then the percentage completion for direct materials is 0%.

Indirect labor would not be a component of conversion costs.

The journal entry to record the use of direct labor in Processing Department #1 would include a debit to WIP-Processing Department #1.

Sunnyside Orchards, a juice manufacturer, uses a process that adds flavoring at the beginning of the process and vitamins and minerals 65% of the way through the process. Conversion costs are evenly distributed. Assume there are no beginning inventories. The company started making 14,000 gallons of the drink, and the 1,500 gallons left in ending WIP were 50% of the way through the process. The equivalent units for flavoring is

The Jones Corporation uses a process system. During the current period, 2,500 units were started and 1,100 units were completed and transferred out. Ending units were 60% complete for materials and 50% complete for conversion costs. Direct materials costs added were $35,405 and conversion costs added were $32,870. There was no beginning WIP inventory and conversion costs are added evenly throughout the process. At the end of the period, the cost per equivalent unit for direct materials would be closest to:

Fun Stuff Manufacturing produces frisbees using a three-step sequential process that includes molding, coloring and finishing. When the frisbees and associated costs are transferred from the molding process to the coloring process, which account is credited?

The following information is provided by Alexandria Corporation: The units in ending WIP inventory were 75% complete for materials and 50% complete for conversion costs. What are the total equivalent units for direct materials?

In a mass-production environment, direct labor is usually a relatively small component of the total manufacturing costs.

Companies that use automated production processes often condense the three manufacturing costs into two categories: Direct materials and Conversion costs.

The existence of ending work in process inventory necessitates how much of the total manufacturing cost should be assigned to units still in ending WIP inventory, and how much of the cost should be assigned to units completed during the period.