Exam 17: Process Costing

Answer the following questions using the information below: Dustin Plastics, Inc., manufactures plastic moldings for car seats. Its costing system utilizes 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 2012 are: Costs for Department A for February 2012 are: -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 2012 are: Costs for the Department A for February 2012 are: What were the equivalent units of direct materials and conversion costs, respectively, at the end of February? Assume Dustin Plastics, Inc., uses the weighted-average process costing method.

Standard costing is extremely useful when unique, high cost products are produced, as compared to the production of multiple products.

Which one of the following statements is true?

Why do we need to accumulate and calculate unit costs in process costing (and also job costing)?

A major advantage of using the FIFO process-costing method is that:

The weighted-average process-costing method calculates the equivalent units by:

When identical or similar units of products or services are mass produced, job-costing is used to calculate an average production cost for all units produced.

Answer the following questions using the information below: The Lumbar Chair Company manufacturers a standard recliner. During February, the firm's Assembly Department started production of 150,000 chairs. During the month, the firm completed 170,000 chairs and transferred them to the Finishing Department. The firm ended the month with 20,000 chairs in ending inventory. All direct materials costs are added at the beginning of the production cycle. Weighted-average costing is used by Lumbar. -What were the equivalent units for conversion costs for February if the beginning inventory was 70% complete as to conversion costs and the ending inventory was 40% complete as to conversion costs?

Describe the differences between process costing and job costing. Discuss some typical products which would be more likely to use process costing as compared to some which would be more likely to use job costing.

Costing systems that are used for the costing of like or similar units of products in mass production are called:

Conversion costs:

Answer the following questions using the information below: Lehman Pottery Company manufactures clay molded pottery on an assembly line. Its standard costing system uses 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 August 2008 are: Costs for August: -What is the balance in ending work-in-process inventory?

In the weighted-average costing method, the costs of direct materials in beginning inventory are NOT included in the cost per unit calculation since direct materials are almost always added at the start of the production process.

A major advantage of the weighted-average process costing is that it provides managers with information about changes in the costs per unit from one period to the next.

Weighted-average cost per equivalent unit is obtained by dividing the sum of costs for beginning work in process plus costs for work done in the current period by total equivalent units of work done to date.

To calculate weighted-average conversion cost per equivalent unit, you multiply total conversion costs to date by total equivalent units of work done to date.

Answer the following questions using the information below: The Cuckoo Clock Shop manufactures clocks on a highly automated assembly line. Its costing system uses 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 the production process. Conversion costs are allocated evenly throughout production. Cuckoo Clock Shop uses weighted-average costing. Data for the Assembly Department for June 2013 are: Costs for June 2013: -What is the total amount debited to the Work-in-Process account during the month of June?

Answer the following questions using the information below: Hudson Dock Company manufactures boat docks on an assembly line. Its standard costing system uses 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 May 20X5 are: Costs for May: -What is the balance in ending work-in-process inventory?

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

Answer the following questions using the information below: The Daltry 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. Daltry Tractor uses weighted-average costing. Data for the Assembly Department for April 2012 are: Costs for April 2012: -What are the equivalent units for direct materials and conversion costs, respectively, for April?