Exam 20: Process Costing

Which of the following is used to calculate the number of units accounted for under first-in, first-out (FIFO)method of inventory valuation of process costing?

Under a process costing system, costs of completed products are transferred to the Finished Goods Inventory at the end of the accounting period.

LDR Manufacturing produces a pesticide chemical and uses process costing. There are three processing departments-Mixing, Refining, and Packaging. On January 1, 2012, the Refining Department had 2,000 gallons of partially processed product in production. During January, 32,000 gallons were transferred in from the Mixing Department and 29,000 gallons were completed and transferred out. At the end of the month, there were 5,000 gallons of partially processed product remaining in the Refining Department. See additional details below. Refining Department, beginning balance at January 1, 2012 Costs added during January Refining Department, ending balance at January 31, 2012 For the Refining Department in the month of January, what was cost per equivalent unit with respect to direct materials costs? Use the weighted-average method. (Round your calculations to the nearest cent.)

Factory rent and utilities are debited to the:

Under the first-in, first-out (FIFO)method, prior period costs are not merged with current period costs.

Conversion costs include the costs of purchasing and converting raw materials into finished products.

In a process costing system, each process or department has its own Work-in-Process Inventory account.

Travel Trails manufactures railway coaches and uses the FIFO method of process costing to record costs. The Work-in-Process Inventory of the Heating Department on October 1 was 70% complete for materials and 20% complete for conversion costs. On October 31, its ending Work-in-Process Inventory was 80% complete for materials and 40% complete for conversion costs. This means that for the ending inventory ________ % of the materials and ________ % of the conversion costs were added during October.

The adjusting entry for overallocated or underallocated manufacturing overhead is usually prepared at the beginning of the accounting period.

The Work-in-Process Inventory account of a process is credited when overallocation of manufacturing overhead occurs in that process.

Michael Paints used a predetermined overhead allocation rate to allocate $75,000 and $65,000 of indirect costs to Coloring Department and Mixing Department, respectively. The journal entry to record the allocation of overhead costs to the Coloring Department is:

LDR Manufacturing produces a pesticide chemical and uses process costing. There are three processing departments-Mixing, Refining, and Packaging. On January 1, 2014, the first department, Mixing, had no beginning inventory. During January, 40,000 fl. oz. of chemicals were started in production. Of these, 32,000 fl. oz. were completed and 8,000 fl. oz. remained in process. In the Mixing Department, all direct materials are added at the beginning of the production process and conversion costs are applied evenly through the process. At the end of the month, LDR calculated equivalent units. The ending inventory in the Mixing Department was 60% complete with respect to conversion costs. With respect to direct materials, what is the number of equivalent units in the ending inventory?

Production cost reports prepared using first-in, first-out (FIFO)method determines the average cost of equivalent units of production by combining beginning inventory costs with current period costs.

Nexus Inc. uses a process costing system. It prepares a production cost report for each processing department. How will the managers of Nexus use these production cost reports to prepare the balance sheet at the end of an accounting period?

The equivalent units of production for transferred in units are always 100% because:

Under process costing, direct materials and direct labor are assigned to Work-in-process Inventory for each process that uses them.

When raw materials are purchased on account, the Accounts Payable account is credited.

The Assembly Department of Smart Computers incurred $250,000 in direct materials and $75,000 in conversion costs. The equivalent units of production for direct materials and conversion costs are 1,000 and 800, respectively. The cost per equivalent unit of production (EUP)for conversion costs is:

If 20,000 units are 60% complete with respect to direct materials, then the equivalent units of production for direct materials are:

The Raw Materials Inventory account is debited when direct materials are issued for production.