Exam 20: Process Costing

In the same time period,it is possible that a production department can produce 1,000 equivalent finished units with respect to direct materials and 1,200 equivalent finished units with respect to direct labor.

A company uses the FIFO method for inventory costing.During a period,a production department had 20,000 units in beginning goods in process inventory which were 40% complete; the department completed and transferred 165,000 units.At the end of the period,22,000 units were in the ending goods in process inventory and are 75% complete.All of these are with respect to labor.The production department had labor costs in the beginning goods is process inventory of $99,000 and total labor costs added during the period are $726,825.Compute the equivalent cost per unit for labor.

What is meant by equivalent units of production,and why are they important when a process cost accounting system is used?

Job order manufacturing and process manufacturing are two major costing systems used in manufacturing.Briefly contrast the characteristics of these two systems.

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 ending goods in process inventory for August.

Lipinski Company completed and transferred 90,000 units during the current period.Based on the following information,determine the cost of the goods completed during the current reporting period and journalize the transfer.

The second step in accounting for production activity in a period is to compute ______________________.

During the year,RB Corp.introduced 132,000 units into production and 144,000 units were completed and transferred to finished goods.At the end of the year,the company had 13,600 units in process that were 80% complete.Determine how many units the company had in goods in process at the beginning of the year.

Embark produces mulch for landscaping use.The following information summarizes production operations for June.The journal entry to record June production activities for goods transfer from production to finished goods is:

If the indirect materials cost for a reporting period was $37,500,the following journal entry would be recorded in the process cost accounting system: Factory Overhead ………………… 37,500 Raw Materials Inventory………………… 37,500

The process cost summary presents calculations of the cost of units completed during the reporting period,but does not present any information about the ending goods in process inventory.

The Machining Department started the current month with a beginning goods in process inventory of $10,000.During the month,it was assigned the following costs: direct materials,$76,000; direct labor,$24,000; and factory overhead,50% of direct labor cost.Also,inventory with a cost of $109,000 was transferred out of the department to the next phase in the process.The ending balance of the Goods in Process Inventory account for the Machining Department is:

Since the process cost summary describes the activities of a production department for a specified reporting period,it does not present information about any costs incurred in prior periods.

Direct costs in process cost accounting include only those costs that can be readily identified with individual product units.

Process cost accounting systems are commonly used by companies that manufacture standardized products by passing them through a series of manufacturing steps.

Describe the flow of overhead costs in a process cost accounting system,including accounts used.