Exam 17: Costing Systems: Process Costing

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 equivalent units of production for direct materials and conversion costs,respectively,of Bakersfield were

Conversion costs are defined as the combined total of direct materials costs and direct labor costs incurred by a production department.

During October,Department A of Answer Inc.started 320,000 units of product in a particular manufacturing process.The beginning work in process inventory was 50,000 units,and the ending inventory was 30,000 units.Direct materials are introduced at the start of processing,and beginning and ending inventories are considered to be 50 percent complete with respect to conversion costs.Department A uses the FIFO costing method. -The number of equivalent units for conversion costs of Answer was

Johnson Electronics Inc.manufactures a variety of microelectronic component parts and utilizes a process costing system.The following information was provided by the accounting department as of July 31,2014: a.Units started during the month of July totaled 118,200. b.Units partially complete as of July 31 equaled 7,400. c.Ending work in process inventory as of July 31,2014,was 70 percent complete. d.Direct materials are added at the beginning of the process,and conversion costs are incurred uniformly throughout the process. e.No units were in process on July 1,2014. Using the information provided,compute the equivalent units of production for direct materials and conversion costs for July using the FIFO costing method.

Direct materials for 8,000 units were added at the beginning of the second process during October.During the month,8,300 units were completed and transferred to the third process.On October 1,there were 600 units in beginning inventory,and on October 31,there were 300 units still remaining in the process.Compute the equivalent units for direct materials for the second process for October using the FIFO costing method.

When computing the cost per equivalent unit,the FIFO costing method considers

Regardless of beginning inventory levels,beginning inventory is always ignored while computing the equivalent units of production.

The number of equivalent units for direct materials is the same as the number for conversion costs.

If 45,000 units of ending work in process inventory are 60 percent complete as to conversion costs,27,000 equivalent units of conversion costs must be incurred to complete these units during the next period.

Use the following information to perform the calculations requested below,assuming that the FIFO costing approach to a process costing system is being used. Beginning work in process inventory: 16,000 units,100 percent complete as to direct materials,85 percent complete as to conversion costs Ending work in process inventory: 36,000 units,100 percent complete as to direct materials,70 percent complete as to conversion costs Units started during the month: 59,000 a.Calculate units to be accounted for during the month. b.Calculate units started and completed during the month. c.Calculate equivalent units for direct materials. d.Calculate equivalent units for conversion costs.

In a process costing system,regardless of the cost approach used,cost of beginning inventory is ignored while computing the cost per equivalent unit.

In order to use a process costing system,products produced should be homogenous in nature.

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 cost of completing a unit of Bakersfield during the current period was

Which of the following statements is true?

The type of product costing system used by a company is dictated by the

Coffeeberry Company manufactures a variety of coffee and utilizes a process costing system.The following information was provided by the accounting department as of May 31,2014: a.Units started during the month of May totaled 40,000. b.Units partially complete as of May 31 equaled 8,600. c.Ending work in process inventory as of May 31,2014,was 75 percent complete. d.Direct materials are added at the beginning of the process,and conversion costs are incurred uniformly throughout the process. e.No units were in process on May 1,2014. Using the information provided,compute the equivalent units of production for direct materials and conversion costs for the month ended May 31,2014,assuming a FIFO costing flow.

Measures of equivalent production are necessary in process costing because

Under the average costing method in a process costing system,the costs in beginning inventory are combined with current period costs to compute an average product unit cost.

It is difficult to track costs to individual products in a continuous flow manufacturing process.