Exam 4: Process Costing and Hybrid Product-Costing Systems

General Conduits Inc. employs a process-costing system for its manufacturing operations. All materials are added at the beginning of the process, and conversion costs are incurred uniformly throughout production. The information that follows relates to February. Work in process, February 1 ( 40 \% complete as to conversion) Units started during February Total units to account for Units completed during February Work in process, February 28 (70 \%complete as to conversion) Total units accounted for 10,500 34,000 Required: A. Calculate equivalent units of direct material for February. B. Calculate equivalent units of conversion activity for February.

Which of the following manufacturers would most likely not use a process-cost accounting system?

Orville Knitters manufactures sweaters and uses an operation-costing system. All sweaters are processed through Department No. 1, with subsequent processing taking place in Department No. 2 or Department No. 3 depending on the type of fabric used. 20,000 sweaters were produced during the year; there was no beginning or ending work in process. 60% of the goods were sent to Department No. 2 for manufacturing. Conversion costs incurred in the three departments totalled $504,000, subdivided as follows: Department No. 1, $360,000; Department No. 2, $60,000; and Department No. 3, $84,000. Data pertaining to two representative orders, Nos. 545 and 567, were: Direct materials \ 112,000 \ 94,000 Number of sweaters 800 1,300 Subsequent processing department No. 3 No. 2 Required: A. Explain the nature of operation costing. B. Determine the cost of order nos. 545 and 567.

Companies that use a process-cost accounting system would:

Cake Corporation had 8,000 units of work in process on October 1. During October, 20,000 units were completed and as of October 30, 6,000 units remained in production. How many units were started during October?

Gilbert adds materials at the beginning of production and incurs conversion costs uniformly throughout the manufacturing process. Consider the data that follow. Units Beginning work in process 20,000 Started in August 60,000 Production completed 55,000 Ending work in process, 4\% complete 25,000 Conversion cost in the beginning work-in-process inventory totaled $120,000, and August conversion costs totaled $270,000. Assuming use of the weighted-average method, which of the following choices correctly depicts the number of equivalent units for materials and the conversion cost per equivalent unit? Equivalent Units: Conversion Cost 1 55.000 \ 4.91 2 65,000 \ 4.88 3 65.000 \ 6.00 4 80.000 \ 4.88 5 80.000 \ 6.00

When determining the cost of a manufactured item under an operation-costing system, a company would:

Cooper Incorporation, which uses a process-costing system, had a balance in its Work-in-Process account of $81,000 on January 1. The account was charged with direct materials, direct labour, and manufacturing overhead of $515,000 throughout the year. If a review of the accounting records determined that $80,000 of goods were still in production at year-end, Cooper should make a journal entry on December 31 that includes:

In a process-costing system, manufacturing costs are accumulated by:

Focus Company, which uses a weighted-average process-costing system, had 7,000 units in production at the end of the current period that were 60% complete. Material A is introduced at the beginning of the process; material B is introduced at the end of the process; and conversion cost is incurred evenly throughout manufacturing. Equivalent-unit production costs follow. Material A: $12.50 Material B: $2.00 Conversion cost: $6.60 The cost of the company's ending work-in-process inventory is:

Scully Products Ltd., which uses a process-costing system, transfers completed production from Department no. 1 to Department no. 2 for further work. Which of the following best describes the account that would be debited to record this transfer?

Baxter Products manufactures office furniture by using an assembly-line process. All direct materials are introduced at the start of the process, and conversion costs are incurred evenly throughout the manufacturing process. An examination of the company's work-in-process account for August revealed the following selected information: Debit side- August 1 balance: 600 units, 40% complete; cost, $44,600 Production started: 1,800 units Direct materials used during August: $90,000 August conversion costs: $51,400 Credit side- Production completed: 1,400 units Supplementary records disclosed direct material cost of $30,000 and conversion costs of $14,600. Conversations with manufacturing personnel revealed that the ending work in process was 80% complete. Required: A. Determine the number of units in the August 31 work-in-process inventory. B. Calculate the cost of goods completed during August, and prepare the appropriate journal entry to record completed production. C. Determine the cost of the August 31 work-in-process inventory.

Operation costing is a popular type of accounting system, one that combines selected features of job-order and process-cost accounting. Required: A. Briefly discuss the basic features that are associated with an operation-costing system. B. Explain why a sweater manufacturer may have a need for an operation-costing system.

National Chemical Limited uses a weighted-average process-costing system. The following data relate to October: Work in process, October 1: 30,000 pounds Direct material 60\% complete Conversion 90\% complete Units started into production 90,000 pounds Work in process, October 31: 40,000 pounds Direct material 50\% complete Conversion 40\% complete Required: A. Calculate the number of pounds completed during October. B. Calculate equivalent units of materials and conversion for October. C. Does National Chemical Limited introduce all of its direct materials at the very beginning of production? Explain your answer.

Maybe Garments Inc. manufactures a variety of fabrics. All materials are introduced at the beginning of production; conversion costs are incurred evenly throughout the manufacturing process. The Weaving Department had 1,000 units of work in process on November 1 that were 60% complete as to conversion costs. During November, 11,000 units were completed and on November 30, 5,000 units remained in production, 20% complete with respect to conversion costs. The equivalent units of conversion for November

Chen Corporation, a new company, adds material at the beginning of its production process; conversion costs, in contrast, are incurred evenly throughout the manufacturing process. During May, the firm completed 15,000 units and had ending work in process of 2,000 units, 60% complete. Equivalent-unit costs were: materials, $15; conversion, $22. The cost of the company's ending work-in-process inventory is:

St. Lawrence River Chemical manufactures a product called Spec. Direct materials are added at the beginning of the process, and conversion activity occurs uniformly throughout production. The beginning work-in-process inventory is 80% complete with respect to conversion; the ending work-in-process inventory is 30% complete. The following data pertain to March: Work in process, March 1 20,000 Units started during March 70,000 Units completed and transferred out 73,000 Work in process, March 31 17,000 Direct Conversion Total Materials Costs Costs: Work in process, March 1 \ 50,283 \ 23,400 \ 26,883 Costs incurred during March 234,900 72,000 162,900 Totals \ 285,183 \ 95,400 \ 189,783 Using the weighted-average method of process costing, the equivalent units of direct materials total:

Equivalent-unit calculations are necessary to allocate manufacturing costs between:

St. Lawrence River Chemical manufactures a product called Spec. Direct materials are added at the beginning of the process, and conversion activity occurs uniformly throughout production. The beginning work-in-process inventory is 80% complete with respect to conversion; the ending work-in-process inventory is 30% complete. The following data pertain to March: Work in process, March 1 20,000 Units started during March 70,000 Units completed and transferred out 73,000 Work in process, March 31 17,000 Direct Conversion Total Materials Costs Costs: Work in process, March 1 \ 50,283 \ 23,400 \ 26,883 Costs incurred during March 234,900 72,000 162,900 Totals \ 285,183 \ 95,400 \ 189,783 Using the weighted-average method of process costing, the cost per unit of conversion activity is:

Maybe Garments Inc. manufactures a variety of fabrics. All materials are introduced at the beginning of production; conversion costs are incurred evenly throughout the manufacturing process. The Weaving Department had 1,000 units of work in process on November 1 that were 60% complete as to conversion costs. During November, 11,000 units were completed and on November 30, 5,000 units remained in production, 20% complete with respect to conversion costs. Calculate the equivalent units of direct materials for November total.