Exam 20: Process Costing

Both job order costing and process costing track the product costs of direct materials,direct labor,and manufacturing overhead through three inventory accounts on the balance sheet.

Which of the following best describes the term equivalent units?

Why are extra journal entries required in a process costing system?

The Polishing Department of Conversations,Inc.had 15,000 units in process on June 1 and received 25,000 units from the Machining Department.During the month,it completed 32,000 units and transferred them to the Packaging Department.Prepare the production cost report for the Polishing Department for the whole units for the month of June.(Use the first-in,first-out method.)

Travel Trails,Inc.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 73% complete for materials and 24% complete for conversion costs.On October 31,its ending Work-in-Process Inventory was 84% complete for materials and 45% complete for conversion costs.This means that for the ending inventory,________% of the materials and ________% of the conversion costs were added during October.

The Refining Department of Ingber Sugar,Inc.had 55,000 tons of sugar to account for in December.Of the 55,000 tons,45,000 tons were completed and transferred to the Boiling Department,and the remaining 10,000 tons were 60% complete.The materials required for production are added at the beginning of the process.Conversion costs are added equally throughout the refining process.Calculate the total equivalent units of production for conversion costs.

The direct labor costs and manufacturing overhead costs required to produce finished goods from raw materials are called ________.

Egerton,Inc.has two processes-Coloring Department and Mixing Department.Egerton sold 350 gallons on account at $110 per gallon.The total cost of processing was $385,000 for 5,500 gallons of paint.Throughout the year,the company used a predetermined overhead allocation rate to allocate $75,000 and $65,000 of indirect costs to the Coloring Department and Mixing Department,respectively.The actual overhead cost incurred amounted to $150,000 at the end of the year.Record the necessary journal entries for the sale of goods and for adjustment of over- or underallocated manufacturing overhead at the end of the year.

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

Production cost reports prepared using the first-in,first-out (FIFO)method determine the cost of equivalent units of production by accounting for beginning inventory costs separately from current period costs.

During the month,New Products Manufacturing incurred $47,000 in direct labor costs in Department 1,$24,000 direct labor costs in Department 2,and $3,500 of indirect labor costs.The summary journal entry to record these transactions includes a ________.

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

In a production cost report,the number of units to account for must always be greater than the number of units accounted for.

Pattern Manufacturing produces a chemical pesticide and uses process costing.There are three processing departments-Mixing,Refining,and Packaging.On January 1,the first department-Mixing-had no beginning inventory.During January,48,000 fl.oz.of chemicals were started in production.Of these,38,000 fl.oz.were completed,and 10,000 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 January,the equivalent unit data for the Mixing Department were as follows: WHOLE UNITS \multicolumn 1 c| Equivalent Units \multicolumn 1 c| Equivalent Units Units to be accounted for Direct Materials Costs Conversion Costs Completed and transferred but 38,000 38,000 38,000 Ending work-in-process* * Percent complete for conversion costs: 44% In addition to the above,the costs per equivalent unit were $1.35 for direct materials and $5.20 for conversion costs.Using this data,calculate the full cost of the ending WIP balance in the Mixing Department.The weighted-average method is used.

A production cost report cannot be used for the pricing of products because it depicts only the ways to control product costs.

Young Manufacturing uses a process costing system and manufactures its product in three departments.Which of the following is not a way in which Young can use the cost per unit of each process?

Production cost reports prepared using the first-in,first-out (FIFO)method assume that the first units started in the production process are the last units completed and sold.

During the month,Diamond Manufacturing incurred $47,000 in direct labor costs in Department 1,$23,000 direct labor costs in Department 2,and $3,500 of indirect labor costs.Which of the following is not part of the summary journal entry to record these transactions?

The number of equivalent units for direct materials and conversion costs must always be equal.

The costs that are transferred out from one process to another process become transferred in costs for the receiving process.