Exam 20: Process Costing

A company uses a process cost accounting system and the weighted average method for inventory costs.The following information is available regarding direct labor for the current year: Goods in process,January 1 5,500 units,80% complete Goods in process,December 31 8,800 units,40% complete Units completed and transferred to finished goods 46,900 units Direct labor costs during the year $266,300 (a)Calculate the equivalent units of production for direct labor for the year. (b)Calculate the average cost per equivalent unit for direct labor (round to the nearest cent).

The FIFO method does not use the beginning inventory costs in computing the cost per equivalent unit for the current period.

In process cost accounting,direct labor includes only the labor that is applied directly to the products.

A materials consumption report is a source document that summarizes the materials used during a reporting period.

A system of accounting in which the costs of each process are accumulated and then assigned to the units of product that passed through the process is a:

If a department that uses process costing starts the reporting period with 100,000 physical units that were 20% complete with respect to direct labor,it must add 80% direct labor in the current period to complete the units.

Embark produces mulch for landscaping use.The following information summarizes production operations for June.The journal entry to record June production activities for overhead allocation is:

Refer to the following information about the Dipping Department of the Indiana Factory for the month of August.Indiana Factory uses the FIFO method of inventory costing. The cost per equivalent unit of materials is $10.00,and the cost per equivalent unit of labor and overhead is $22.00.Compute the cost that should be assigned to the beginning units that were completed and transferred during August.

The managers of process manufacturing systems focus on the series of processes needed to complete the production of products.

The cost of units transferred from Goods in Process Inventory to Finished Goods Inventory is called the cost of goods manufactured.

A process cost summary involves computations and analysis at four sequential steps.These are (1)_________ (2)_____________,(3)_______________,and (4)______________.

What is a hybrid costing system? When is a hybrid costing system appropriate for a manufacturer?

A company uses the weighted-average method for inventory costing.At the end of the period,22,000 units were in the ending goods in process inventory and are 100% complete for materials and 75% complete for labor and overhead.The equivalent costs per unit are; materials,$2.65,labor,$2.15,and overhead,$3.20.Compute the cost that would be assigned to the ending goods in process inventory for the period.

Which of the following characteristics applies to process cost accounting but not to job order cost accounting?

Process cost accounting systems are commonly used by companies that produce a large volume of standardized units on a continuous basis.

After posting all actual factory overhead and applying factory overhead to production departments in a process costing system,

Browning Company had 8,700 units in beginning inventory with accumulated costs for direct materials of $17,900,$16,500 direct labor,and $13,200 of overhead.During July,the company completed and transferred 50,000 units to finished goods.Costs incurred in the current period included $45,000 of direct materials,$58,500 of direct labor,and $46,800 of factory overhead.Ending inventory consisted of 12,000 units which were 80% complete with respect to materials and 50% complete with respect to labor and overhead.Compute the value assigned to ending inventory based on the weighted average method of inventory costing.

After all process cost accounting journal entries are recorded and posted for a reporting period,the Factory Payroll account should have a zero balance.

Equivalent units of production are equal to:

Accountants use the term process cost accounting system because this system uses a number of trained individuals and computers to process the collected cost information.