Exam 20: Process Costing

When indirect materials are issued to production,the Manufacturing Overhead account is credited.

Under process costing,depreciation on plant machinery is debited to the respective department's Work-in-Process Inventory.

Which of the following is an example of how managers use product cost reports to control costs?

In a process costing system,production costs are ________.

Dakota,Inc.purchased raw materials worth $4,000 on account.The journal entry to record the purchase of raw materials on account is ________.

A production cost report helps managers identify the costs that can be reduced in the production process.

Process costing is the most appropriate costing method for a restaurant serving specialty cuisine.

Conversion costs include ________.

The Assembling Department of Oberon,Inc.had 10,600 units in process on December 1 and received 30,600 units from the Sewing Department.During the month,it completed 20,500 units and transferred them to the Packaging Department.Calculate the number of units accounted for by the Assembling Department for December.The company uses the FIFO method.

The production cost report for Department 1 shows that $160,000 was assigned to the 38,000 units transferred to Department 2.This transfer cost assigned to units transferred to Department 2 is recorded with a debit to Work-in-Process-Department 1.

Southwest Sugar,Inc.has six processing departments for refining sugar-Affination,Carbonation,Decolorization,Boiling,Recovery,and Packaging.Conversion costs are added evenly throughout each process.Data from the month of August for the Recovery Department are as follows: Metric Tons Beginning Work-in-Process Inventory 0 Started in production 21,500 Ending Work-in-Process Inventory Costs Beginning Work-in-Process Inventory \ 0 Costs added during August Direct materials 520,000 Direct labor 245,000 Manufacturing overhead Total costs added during August \ 885,000 The ending Work-in-Process Inventory is 100% and 85% complete with respect to direct materials and conversion costs,respectively.The weighted-average method is used.How many metric tons of sugar were refined and transferred to the Packaging Department in August?

A process costing system is most suitable for businesses that manufacture batches of unique products or provide specialized services.

Selected production and cost data of Westgate Manufacturing Company follow for June: Mixing Department Finishing Department Units to account for: Beginning work-in-process, May 31 32,000 17,400 Started in June 47,000 Transferred in during June 63,000 Total units to account for 79,000 80,400 Units accounted for Completed and transferred out during June 63,000 68,400 Ending work-in-process, June 30 16,000 12,000 Total units accounted for 79,000 80,400 On June 30,the Mixing Department ending Work-in-Process Inventory was 80% complete for materials and 40% complete for conversion costs.The Finishing Department ending Work-in-Process Inventory was 75% complete for materials and 60% complete for conversion costs. Requirements: 1.Compute the equivalent units of production for direct materials and for conversion costs for the Mixing Department. 2.Compute the equivalent units of production for transferred in costs,direct materials,and conversion costs for the Finishing Department.

The combined production costs from all departments for completed products are transferred to the Cost of Goods Sold account immediately after the completion of all production processes.

Cost amounts that are transferred out of one department become the transferred in cost for the next department.

At the end of an accounting period,the costs assigned to a production department can be split into the cost of units fully completed and transferred out,and the cost of units partially completed and remaining in the Work-in-Process Inventory of that department.

What does the concept of equivalent units of production allow businesses to measure?

Gravity 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,47,000 fl.oz.of chemicals were started in production.Of these,38,000 fl.oz.were completed,and 9,000 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.The weighted-average method is used. At the end of January,the equivalent unit data for the Mixing Department were as follows: WHOLE UNITS Equivalent Units Equivalent Units Units accounted for Direct Materials Costs Conversion Costs Completed and transferred 38,000 38,000 38,000 Ending work-in-process* * Percent complete for conversion costs: 40% In addition to the above,the costs per equivalent unit were $1.51 for direct materials and $5.00 for conversion costs.Using this data,calculate the cost of the units that were transferred out of the Mixing Department and into the Refining Department.

The Assembly Department of ZigZag,Inc.,manufacturer of computers,incurred $280,000 in direct material costs and $70,000 in conversion costs.The equivalent units of production for direct materials and conversion costs are 1,000 and 800,respectively.The cost per equivalent unit of production for direct materials is ________.(Round your answer to the nearest cent.)

The production cost report for Department 2 shows that $452,000 was assigned to the 53,000 units transferred to Finished Goods Inventory.Cost of goods manufactured equals $452,000.