Exam 20: Process Costing

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

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

In most organizations,managers are often rewarded based on how well they meet the budget.

A company uses process costing and a perpetual inventory system.When finished products are sold,Cost of Goods Sold is debited and Finished Goods Inventory is credited.

Zymosis Manufacturing produces a pesticide chemical and uses process costing.There are three processing departments-Mixing,Refining,and Packaging.On January 1,the Refining Department had 2000 gallons of partially processed product in production.During January,33,000 gallons were transferred in from the Mixing Department,and 29,000 gallons were completed and transferred out.At the end of the month,there were 6000 gallons of partially processed product remaining in the Refining Department.See additional details below. Refining Department,beginning balance at January 1 Quantity: 2000 units (partially processed) Cost: \ 15,600 of costs transferred in \ 4500 of materials cost \ 1000 of conversion cost 21,100 total account balance Costs added during January Cost of units transferred in \ 222,400 Direct materials cost \ 93,750 Conversion cost \ 48,000 Refining Department,ending balance at January 31 Quantity: 6000 units (partially processed) Percent complete for materials cost: 90\% Percent complete for conversion cost: 75\% What was the cost per equivalent unit with respect to conversion costs for the Refining Department in the month of January? (Use the weighted-average method,and round your calculations to the nearest cent.)

A process is one of a series of steps in manufacturing,usually associated with making large quantities of similar items.

The Assembling Department of Origination Inc.had 10,000 units in process on December 1 and received 30,000 units from the Sewing Department.During the month,it completed 20,000 units and transferred them to the Packaging Department.Calculate the number of units accounted for by the Assembling Department for December.Prepare the production cost report for the Assembling Department for the units for the month of December.Use the FIFO method.

Production cost reports prepared using first-in,first-out (FIFO)method determine the average cost of equivalent units of production by combining beginning inventory costs with current period costs.

On September 30,the Drying Department of Jamoca,Inc.had ending Work-in-Process Inventory that was 28% complete for materials and 23% complete for conversion costs.The company uses the FIFO method.This means that for the ending Work-in-Process inventory,________% of materials and ________% of the conversion costs were added during September.

Richardson,Inc.purchased raw materials worth $800 for cash.The journal entry to record this transaction will include ________.Process costing is used.

In a production cost report,the number of total units to account for consists of ________.The weighted-average method is used.

Selected production and cost data of Rivera Manufacturing Company follow for June: On June 30,the Mixing Department's ending Work-in-Process Inventory was 80% complete for materials and 40% complete for conversion costs.The Finishing Department's ending Work-in-Process Inventory was 75% complete for materials and 60% complete for conversion costs.The weighted-average method is used. 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.

Under process costing,costs assigned to goods sold are transferred to the Cost of Goods Sold account from the ________.A perpetual inventory system is used.

Direct labor costs are accumulated in the Manufacturing Overhead account.Process costing is used.

The beginning inventory costs and the product costs of the current period are combined to determine the average cost of equivalent units of production under the ________.

Which of the following best describes the term equivalent units?

When compared to job order costing,why are additional journal entries required in a process costing system?

ChemKill 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 a zero beginning balance.During January,44,000 gallons of chemicals were started into production.During the month,35,000 gallons were completed,and 9000 remained in process,partially completed.In the Mixing Department,all direct materials are added at the beginning of the production process,and conversion costs are applied evenly throughout the process. During January,the Mixing Department incurred $52,000 in direct materials costs and $211,000 in conversion costs.At the end of the month,the ending inventory in the Mixing Department was 60% complete with respect to conversion costs.The weighted-average method is used. The total cost of the chemical pesticide in ending inventory was ________.(Round any intermediate calculations two decimal places,and your final answer to the nearest dollar.)

A production cost report can help managers identify the most profitable products.

The Assembling Department of Weathercoat Liners,Inc.had 8000 units in process on December 1 and received 15,000 units from the Sewing Department.The company uses FIFO.Calculate the number of units to account for by the Assembling Department for December.