Exam 17: Process Costing

An operation costing system would be applicable to

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. -Weighty Steel processes a single type of steel.For the current period the following information is given: All materials are added at the beginning of the production process.The beginning inventory was 40% complete as to conversion,while the ending inventory was 30% completed for conversion purposes. Weighty uses the weighted-average costing method. What is the total cost assigned to the units completed and transferred this period?

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 actual units remain in ending work-in-process,assuming a FIFO cost flow assumption?

Which of the following manufactured products should use process costing?

The first-in,first-out process-costing method computes unit costs by confining equivalent units to work only done during the current period.

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. -How many of the Rest-a-Lot company units that were started during February were completed during February?

Jordana Woolens is a manufacturer of wool cloth.The information for March is as follows: Beginning work in process was half converted as to labour and overhead.Direct materials are added at the beginning of the process.All conversion costs are incurred evenly throughout the process.Ending work in process was 60% complete. Required: Prepare a production cost worksheet using the weighted-average method.Include any necessary supporting schedules.

Marv and Vicki own and operate a vegetable canning plant.In recent years their business has grown tremendously and at any point in time they may have 30 to 35 different vegetables being processed.Also,during the peak summer months there are several thousand bushels of vegetables in some stage of being processed at any one time.With the company's growth during the past few years the owners decided to employ an accountant to provide cost estimations on each vegetable category and prepare monthly financial statements.Although the accountant is doing exactly as instructed,Marv and Vicki are confused about the monthly operating costs.Although they process an average of 50,000 canned units a month,the monthly production report fluctuates wildly. Required: Explain how income can fluctuate when sales are relatively stable.

The weighted average method of process costing assigns the cost of equivalent units worked on during the current period first to complete beginning inventory,next to start and complete new units,and finally to units in ending work-in-process inventory.

Examples of industries that would use process costing include the pharmaceutical and semiconductor industry.

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: -Calculate equivalent units for conversion costs using the FIFO method.

Process-costing journal entries and job-costing journal entries are similar with respect to direct materials and conversion costs.

Which one of the following methods focuses on the total costs and total equivalent units completed to date?

Operating personnel must be able to estimate the percentage of work-in-process completed in process costing.

Use the information below to answer the following question(s). Canadian Oil Company manufactures cooking oils.All direct materials are added at the beginning of the production process.The company currently uses the FIFO method.Data for the month of July is listed below. -What is the amount of direct materials assigned to ending work-in-process?

An operation-costing system is a hybrid costing system,applied to batches of similar products.

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. -What is the Rest-a-Lot company cost of the goods transferred out during February?

Creative Colors Paint Company placed 315,000 litres of direct materials into the mixing process.All direct materials are placed in mixing at the beginning of the process and conversion costs occur evenly during the process.Creative Colors uses weighted-average costing.The initial forecast for the end of the month was to have 75,000 litres still in process,15% converted as to labour and factory overhead. Required: a.Determine the total equivalent units (in process and transferred out)for direct materials and for conversion costs,assuming there was no beginning inventory. b.With the installation of a new paint processing filtration device,the forecast for the end of the month was to have 50,000 litres still in process,70% converted as to labour and factory overhead.In this event,determine the equivalent units (in process and transferred out)for direct materials and for conversion costs,assuming there was no beginning inventory.

Vita-Heath Company manufactures three different types of vitamins: vitamin C,vitamin B,and vitamin D.The company uses four operations to manufacture the vitamins: mixing,tabletting,encapsulating,and bottling.Vitamins C and B are produced in tablet form (in the tabletting department)and vitamin D is produced in capsule form (in the encapsulating department).Each bottle contains 80 vitamins,regardless of the product. Conversion costs are applied based on the number of bottles in the tabletting and encapsulating departments.Conversion costs are applied based on direct labour hours in the mixing department.It takes two minutes to mix ingredients for a 80-unit bottle for each product.Conversion costs are applied based on machine hours in the bottling department.It takes one-tenth of a minute of machine time to fill a 80-unit bottle,regardless of product. Vita-Health Company uses operation costing. The company is planning to complete one batch of each type of vitamin in March.The budgeted number of bottles and expected direct material cost for each type of vitamin is as follows: The budgeted conversion costs for March are as follows: Required: 1.Calculate the conversion cost rates for each department. 2.Calculate the budgeted cost of goods manufactured for vitamin C,vitamin B,and vitamin D for the month of March. 3.Calculate the cost per 80-unit bottle for each type of vitamin for the month of July.

Which of the following is NOT one of the procedures in process costing?