Exam 17: Costing Systems: Process Costing

Process cost reports are prepared for each of the processes or work cells.

It is not necessary to ascertain the portion of ending Work in Process Inventory applicable to direct materials costs versus conversion costs.

Separate equivalent units of production usually are calculated for materials and conversion costs.

A measure of productive output of units for a period of time,expressed in terms of completed whole units,is the definition of

To decide the cost of a product,managers use information about past and projected product costing and customer preferences.

Describe how the process costing information is used by managers in every stage of the management process.

A journal entry to transfer costs from the Work in Process account to Finished Goods Inventory account will include a debit to Finished Goods Inventory.

Trunkey Products Inc.uses a process costing system and has just completed production for the month of November 2014.The following production data were obtained from the accounting records: a.Units in beginning inventory totaled 6,800 and were 30 percent complete as of November 1 (all direct materials were added to these products in the preceding month). b.During the period,156,200 units were started. c.19,200 units were partially completed as of November 30,2014. d.Ending work in process inventory was 40 percent complete at month end. From the data given,compute the equivalent units of production for direct materials and conversion costs for the month ended November 30,2014,assuming a FIFO flow of costs.

A company that manufactures potato chips would probably use a process costing system.

The Bakersfield Company has the following information available: At the beginning of the period,there were 800 units in process that were 60 percent complete as to conversion costs and 100 percent complete as to direct materials costs.During the current period,5,800 units were started and completed.Ending inventory contained 400 units that were 60 percent complete as to conversion costs and 100 percent complete as to direct materials costs.(Assume that the company uses the FIFO process costing method. ) -The total costs that will be transferred into the Finished Goods Inventory account of Bakersfield during the current period are

Because process costing is normally associated with a continuous production flow,products that are in process at the beginning of the period are assumed to be the first products completed during the current period.

Nader Inc.has the following information available: At the beginning of the period,there were 500 units in process that were 40 percent complete as to conversion costs and 100 percent complete as to direct materials costs.During the current period,4,300 units were started and completed.Ending inventory contained 320 units that were 80 percent complete as to conversion costs and 100 percent complete as to direct materials costs.(Assume that the company uses the FIFO costing method. ) -The total costs that will be transferred into the Finished Goods Inventory account of Nader Inc.during the current period are

The reason for combining direct labor and overhead costs together and calling them "conversion costs" is that

During April,Department A started 400,000 units of product in a particular production process.The beginning work in process inventory was 40,000 units,and the ending inventory was 50,000 units.Direct materials are introduced at the start of processing,and beginning and ending inventories are considered to be 40 percent complete with respect to conversion costs.Department A uses the FIFO costing method. -The number of units started and completed in Department A during April was

Use the following data provided by Star Inc.to answer the questions below.The company uses a process costing system. The FIFO costing method is used by the company. -Units completed and transferred out of the department of Star Inc.during the month totaled

Unit costs are determined by dividing the total costs of the period by the equivalent units.

Which of the following is not included in conversion costs?

Use the following information to perform the calculations requested below,assuming that the average costing approach to a process costing system is being used. Beginning work in process inventory: 7,000 units,100 percent complete as to direct materials,65 percent complete as to conversion costs Ending work in process inventory: 22,500 units,100 percent complete as to direct materials,75 percent complete as to conversion costs Units started during the month: 46,000 a.Calculate units completed and transferred out during the month. b.Calculate units to be accounted for during the month. c.Calculate equivalent units for conversion costs. d.Calculate equivalent units for direct materials.

Regardless of the product costing system used,when the products are completed,they are transferred from work in process inventory to finished goods inventory.

The Taylor Company uses a process costing system.Assume that direct materials are added at the beginning of the period and that direct labor and overhead are added continuously throughout the process.The company uses the FIFO costing method.The following data are available for one of its accounting periods -Equivalent units for conversion costs of Taylor Company are