Exam 17: Process Costing

Four Seasons Company makes snow blowers. Materials are added at the beginning of the process and conversion costs are uniformly incurred. At the beginning of September the work-in-process is 40 percent complete and at the end of the month it is 60 percent complete. Other data for the month include: Beginning work-in-process costs: Required: a. Using the weighted-average method determine the assignment of costs to units transferred-out and ending inventory. b. Prepare journal entries to record transferring of materials to processing; and, the cost of the units completed and transferred from processing to finished goods.

Standard costing is not possible in a firm that uses process costing.

The first-in, first-out method computes unit costs by

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 amount of conversion costs are assigned to the ending Work-in-Process account for April?

Universal Industries operates a division in Brazil, a country with very high inflation rates. Traditionally, the company has used the same costing techniques in all countries so as to facilitate reporting to corporate headquarters. However, the financial accounting reports from Brazil never seem to match the actual unit results of the division. Management has studied the problem and it appears that beginning inventories may be the cause of the unmatched information. The reason is that the inventories have a different financial base because of the severe inflation. Required: How can process costing assist in addressing the problem facing Universal Industries?

Which of the following assertions is true concerning conversion costs?

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: -What are the equivalent units for direct materials and conversion costs, respectively?

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?

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.

The president of the Gulf Coast Refining Corporation wants to know why his golfing partner, who is the chief financial officer of a large construction company, calculates his costs by the job, but his own corporation calculates costs by large units rather than by individual barrel of oil.

Use the information below to answer the following question(s). Plastic Molding, Inc.'s costing system 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. Conversion costs are allocated evenly throughout production. Data for the Assembly Department for March are: -How many units were completed and transferred out of the Assembly Department during March?

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: -What is the direct materials cost per equivalent unit during June?

Process-costing journal entries and job-costing journal entries are similar except for the multiple work-in-process accounts in the job-costing system.

Process-costing systems separate costs into cost categories according to the timing of when costs are introduced into the process.

Use the information below to answer the following question(s). Apex Disk Company operates a computer disk manufacturing plant. Direct materials are added at the end of the process. The following data were presented for August -How many units remain in ending work-in-process, assuming a FIFO cost flow assumption?

Use the information below to answer the following question(s). Plastic Molding, Inc.'s costing system 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. Conversion costs are allocated evenly throughout production. Data for the Assembly Department for March are: -Beginning inventory contained 5,000 units of goods that were 40 percent complete as to direct material, and 50 percent complete as to conversion. What is the equivalent units completed for materials and conversion at the beginning of the year, respectively?

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.

The Leather Factory has two departments that process all of its production, the Tanning Department and the Finishing Department. Production begins in the Tanning Department, then the units are transferred to the Finishing Department. Conversion costs are added evenly throughout the process, no additional materials are added in the Finishing Department. Beginning work-in-process in the finishing department was 60 percent complete as to conversion; ending inventory was 30 percent complete. Additional information about the Finishing Department follows: Beginning work-in-process costs: Required: Using the weighted-average method determine the assignment of costs to units transferred-out and ending inventory for the Finishing Department.

Which of the following journal entries properly records the assignment of conversion costs to work-in-process inventory, and the conversion-cost variances of the Assembly Department assuming that conversion costs are 20% higher than expected?

Smithers Ltd. uses the FIFO method for its production costing. On June 1, it had 35,000 units in beginning work in process that were 60% complete with respect to conversion costs. During the month it completed 80,000 units and on June 30, there were 16,000 units in ending work in process. These units were 35% complete with respect to conversion. Direct materials are added at the beginning of the process and no units are lost during production. The costs associated with the beginning inventory were $83,300 for direct materials and $66,780 for conversion. During the month, Smithers issued $146,400 of direct materials and incurred $206,720 of conversion costs. Required: Prepare a production cost worksheet using the FIFO method.