Exam 17: Process Costing

Use the information below to answer the following question(s).Carnival Furniture had 60,000 foam cushions in process at May 1 (70% converted)and 40,000 cushions in process at May 31 (50% converted).All direct materials are added at the beginning of the production process.During the month, 140,000 cushions were transferred to finished goods. -What is the Carnival Furniture equivalent units for materials costs for May using the weighted average method?

Use the information below to answer the following question(s).Father Time Clock Shop manufactures clocks on an automated assembly line.It utilizes two cost categories: direct materials and conversion costs.Each product must pass through the Assembly Department and the Testing Department.Direct materials are added at the beginning of production, while conversion costs are allocated evenly throughout production, and the company uses weighted-average costing.Data for the Assembly Department are: -Which of the following entries would be made to record the issue of direct materials in the Testing Department, under process-costing?

The final step of the accounting for processes with respect to process costing is to

A distinctive feature of the FIFO process costing method is that the work done on beginning inventory before the current period is averaged with work done in the current period.

The president of Sampson Ltd.has approached the controller for the company with concerns over the projected year end results.The company needs to present its financial statements to the bank to renew its loan and the president is concerned that the loan may either be denied, or the renewal terms will impose a much higher interest rate.The following summarizes the conversation between the president and the controller: President: I am very concerned about the upcoming loan renewal.Our cash position is low and our operating results for the year were not as strong as expected.Our unit cost of production has come in at $1,800 based on equivalent units of production of 2,590.I know that currently we have 600 units in ending work in process that are only 15% complete.If we were to reclassify these as 80% complete, we would increase our equivalent units of production by 390.Since all of our 2,500 completed units were sold, this reclassification would lower our unit costs, reduce cost of goods sold and increase our ending work in process inventory which could be used as collateral.This would improve our financial position and allow us to renew our loan and keep our current rate of interest.Controller: I think this is risky.It would be easy to determine that the units are not 80% complete.President: I don't see how.By the time we are audited, the units will have long since been completed and shipped to customers.Required: b.Referring back to the standards of ethical conduct, what should you do as controller?

Discuss some typical products which would likely use process costing.

Brampton Ltd.uses an automated process to manufacture key chains.For September, the company had the following activities: Direct materials are placed into production at the beginning of the process and conversion costs are incurred evenly throughout the process.There is no spoilage.Required: Prepare a production cost worksheet using the FIFO method.

Answer the following questions using the information below: The Townsend Tractor Company manufactures small garden tractors on a highly automated assembly line.Its' costing system uses two cost categories, direct materials and conversion costs.Each tractor must pass through the Assembly Department and the Testing Department.Direct materials are added at the beginning of the production process.Conversion costs are allocated evenly throughout production.Townsend Tractor uses weighted-average costing. -What is the Townsend Company conversion cost per equivalent unit in April?

Equivalent units measure output in terms of the physical quantities of each of the inputs (factors of production)that have been consumed by the units.

Marvin Ltd.uses an automated process in its manufacturing operations.On November 1, the company had 25,000 units in beginning work in process which were 80% complete with respect to conversion.During the month of November, it started 120,000 into production.On November 30, there were 20,000 units in process, which were 40% complete with respect to conversion.Direct materials are added at the beginning of the process, and no units are spoiled in production.The company has standard costs per unit as follows: direct materials $4.00; conversion costs $2.00.Actual costs for November: The beginning inventory had direct materials costs of $105,750 and conversion costs of $45,500.During the month, the company issued $510,000 of direct materials and incurred $203,400 of conversion costs.Required: 1.Prepare a journal entry to record the direct material placed into work-in-process.The direct materials variance, if there is one, is recorded when materials are placed into production.2.What is the end of month balance in the Work-in-Process Inventory account assuming that variances are closed to the Cost of Goods Sold account?

Answer the following questions using the information below: The Rest-a-Lot chair company manufacturers a standard recliner.During February, the firm's Assembly Department started production of 75,000 chairs.During the month, the firm completed 80,000 chairs, and transferred them to the Finishing Department.The firm ended the month with 10,000 chairs in ending inventory.There were 15,000 chairs in beginning inventory.All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process.The FIFO method of process costing is used by Rest-a-Lot.Beginning work in process was 30% complete as to conversion costs, while ending work in process was 80% complete as to conversion costs.Beginning inventory: Manufacturing costs added during the accounting period: -What were the Rest-a-Lot company equivalent units for conversion costs during February?

Which of the following is FALSE concerning process costing?

Production costs are divided into three classifications: administrative costs, direct materials, and conversion costs in process costing.

Pet Products Company uses an automated process to manufacture its pet replica products.For June, the company had the following activities: Direct materials are placed into production at the beginning of the process and conversion costs are incurred evenly throughout the process.Required: Prepare a production cost worksheet using the FIFO method.Round equivalent unit costs to the nearest cent.

Answer the following questions using the information below: Dustin Plastics, Inc., manufactures plastic moldings for car seats.Its costing system uses two cost categories, direct materials and conversion costs.Each product must pass through Department A and Department B.Direct materials are added at the beginning of production.Conversion costs are allocated evenly throughout production.Data for Department A for February 2018 are: Costs for the Department A for February 2018 are: -What is the total amount transferred to Department B in February?

Surf Products Company uses an automated process to clean and polish its souvenir items.Direct materials are placed into production at the beginning of the process and conversion costs are incurred evenly throughout the process.The following data pertain to March. Required: Using the first-in, first-out method determine the assignment of costs to units transferred-out and ending inventory.

Use the information below to answer the following question(s).Reynolds Dock Company manufactures boat docks on an assembly line.Its standard costing system utilizes two cost categories; direct materials and conversion costs.Each product must pass through the Assembly Department and the Finishing Department.Direct materials are added at the beginning of the production process.Conversion costs are allocated evenly throughout production.Data for the Assembly Department for October 2019 are: -Which of the following journal entries records the actual Assembly Department's conversion costs for the month assuming conversion costs are 20 percent higher than expected?

The first-in, first-out (FIFO)process costing method assigns the cost of the previous accounting period's equivalent units in beginning work-in-process inventory to the first units completed and transferred out of the process.

Managers find operation costing useful in cost management because it

Answer the following questions using the information below: Dustin Plastics, Inc., manufactures plastic moldings for car seats.Its costing system uses two cost categories, direct materials and conversion costs.Each product must pass through Department A and Department B.Direct materials are added at the beginning of production.Conversion costs are allocated evenly throughout production.Data for Department A for February 2018 are: Costs for the Department A for February 2018 are: -What is the total amount of the work-in-process ending inventory for Department A at the end of February?