Exam 19: Costing Systems Process Costing

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.

The FIFO process costing method assumes that the items in ending work in process inventory were started and 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

Mention the two cost allocation methods used in a process costing system.

A job order costing system is used by companies that manufacture large amounts of similar products or liquid products.

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.

When the FIFO costing method is used in process costing,the number of units in beginning inventory is multiplied by 100 percent to determine the equivalent units.

The basis used in computing equivalent unit cost under process costing system is made up of certain specific jobs worked on during the fiscal year.

The following data were taken from the accounting records of a company that uses the FIFO method in its process costing system: $\quad$ Beginning work in process inventory: $\quad$ 20,000 units (materials 100% complete,conversion costs 60% complete) $\quad$ Started in process during the period: $\quad$ 80,000 units $\quad$ Ending work in process inventory: $\quad$ 30,000 units (materials 100% complete,conversion costs 70% complete) The equivalent units are

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

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 cost of completing a unit of Nader Inc.during the current period was

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

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

In a process costing system,total period costs incurred by a company are traced to individual processes.

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

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: 6,000 units,100 percent complete as to direct materials,75 percent complete as to conversion costs Ending work in process inventory: 18,000 units,100 percent complete as to direct materials,65 percent complete as to conversion costs Units started during the month: 44,000 a.Calculate units started and completed 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.

Equivalent units of production usually are determined for

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

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

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