Exam 6: Process Costing

A production report contains information on costs transferred in from prior departments as well as costs added in the department such as direct materials, direct labour, and overhead.

What is included in conversion costs?

Which two methods are used to determine equivalent units of production in process costing?

What is the major advantage of the weighted average costing method?

What two categories of completed units are needed in the FIFO costing method so that each category can be costed correctly?

If changes occur in the purchase price of the manufacturing inputs from one period to the next, then the FIFO costing method produces a more accurate unit cost than does the weighted average costing method.

Which of the following is used to record direct materials, direct labour, and applied overhead costs at the time they are used?

Process costing is least useful in situations where there are a large number of homogeneous products.

Large manufacturing plants, such as chemical, food, and tire manufacturers, typically use process costing.

Which business is most likely to use process costing?

For which of the following are the total associated manufacturing costs under the FIFO costing method the sum of the prior-period costs plus the costs incurred in the current period to finish the units?

In parallel processing, two subcomponents can be worked on simultaneously in different processes and then brought together in a final process for completion.

Refer to M&M Manufacturing Company. What were the equivalent units of production for conversion costs?

Match each following terms with their correct description from the items listed below. -Separates work and costs of the equivalent units in beginning inventory from work and costs of the equivalent units produced during the current period

A production report provides information about the physical units processed in a department and also about the manufacturing costs associated with them.

Purple, Inc. manufactures a product that passes through two processes. The following information is available for the first department for February. All materials are added at the beginning of the process. Beginning Work-in-Process Inventory consisted of 400 units that were 60% complete with respect to conversion. Ending Work-in-Process Inventory consisted of 1,000 units that were 10% complete with respect to conversion. During the month, 6,000 units were started in process. Required: A. Prepare a physical flow schedule for the first department. B. Compute equivalent units for the first department using the weighted average costing method. C. How would your answer change in part B if the beginning Work-in-Process Inventory consisted of 400 units that were 80 percent complete with respect to conversion?

The unit information section of the production report has two major subdivisions: (1) units to account for; and (2) units accounted for.

In process costing, which account will the cost of Finished Goods Inventory be transferred to when the goods are sold?

Which term refers to a cost transferred from a prior process to a subsequent process?

Habitat Company uses the weighted average costing method in its costing system. In the assembly department, the equivalent units for conversion costs amounted to 35,000 for the month of May. In beginning Work-in-Process Inventory, 5,000 units were 50% complete. During the month, 33,000 units were started and 31,400 were completed and transferred. How many units were in the ending Work-in-Process Inventory?