Exam 20: Process Cost Systems

Conversion costs are usually incurred evenly throughout a process.

Just-in-time processing is a business philosophy that focuses on reducing time and cost and eliminating poor quality. This is accomplished in manufacturing and non-manufacturing processes by:

Department E had 4,000 units in Work in Process that were 40% completed at the beginning of the period at a cost of $12,500. 14,000 units of direct materials were added during the period at a cost of $28,700. 15,000 units were completed during the period, and 3,000 units were 75% completed at the end of the period. All materials are added at the beginning of the process. Direct labor was $32,450 and factory overhead was $18,710. The number of equivalent units of production for the period for conversion if the average cost method is used to cost inventories was:

In applying the first-in, first-out method of costing inventories, if 8,000 units which are 30% completed are in process at June 1, 28,000 units are completed during June, and 4,000 units were 80% completed at June 30, the number of equivalent units of production for June was 28,600.

If Department K had 2,500 units, 45% completed, in process at the beginning of the period, 15,000 units were completed during the period, and 1,200 units were 40% completed at the end of the period, what was the number of equivalent units of production for the period for conversion if the first-in, first-out method is used to cost inventories? Assume the completion percentage applies to both direct materials and conversion cost.

The Mountain Springs Water Company has two departments, Purifying and Bottling. The Bottling Department had 8,000 liters in beginning work in process inventory (60% complete). During the period 70,000 liters were completed. The ending work in process was 3,000 liters (60% completed). What are the total equivalent units for direct materials under the FIFO method if materials were added at the beginning of the process?

A form prepared periodically for each processing department summarizing (1) the units for which the department is accountable and the units to be assigned costs and (2) the costs charged to the department and the allocation of these costs is termed a:

In the manufacture of 10,000 units of a product, direct materials cost incurred was $145,800, direct labor cost incurred was $82,000, and applied factory overhead was $45,500. What is the total conversion cost?

In process cost accounting, the costs of direct materials and direct labor are charged directly to:

Mocha Company manufactures a single product by a continuous process, involving three production departments. The records indicate that direct materials, direct labor, and applied factory overhead for Department 1 were $100,000, $125,000, and $150,000, respectively. The records further indicate that direct materials, direct labor, and applied factory overhead for Department 2 were $55,000, $65,000, and $80,000, respectively. In addition, work in process at the beginning of the period for Department 1 totaled $75,000, and work in process at the end of the period totaled $60,000. The journal entry to record the flow of costs into Department 1 during the period for direct materials is:

Department B had 3,000 units in Work in Process that were 25% completed at the beginning of the period at a cost of $12,500. 13,700 units of direct materials were added during the period at a cost of $28,700. 15,000 units were completed during the period, and 1,700 units were 95% completed at the end of the period. All materials are added at the beginning of the process. Direct labor was $32,450 and factory overhead was $18,710. The number of equivalent units of production for the period for materials if the first-in, first-out method is used to cost inventories was:

If 16,000 units of materials enter production during the first year of operations, 12,000 of the units are finished, and 4,000 are 75% completed, the number of equivalent units of production would be 15,000.

In a just-in-time system, processing functions are combined into work centers, sometimes called departments.

The Mountain Springs Water Company has two departments, Purifying and Bottling. The Bottling Department had 3,000 liters in beginning work in process inventory (30% complete). During the period 71,000 liters were completed. The ending work in process was 5,000 liters (70% completed). What are the total equivalent units for direct materials (using the FIFO method) if materials were added at the beginning of the process?

Once equivalent units are calculated for materials, this number will also be used for direct labor and factory overhead.

Which of the following is not included in conversion costs?

Conversion costs include materials, direct labor, and factory overhead.

Discuss how equivalent units are computed under the average cost method.

Process manufacturing usually reflects a manufacturer that produces small quantities of unique items.

The following production data were taken from the records of the Finishing Department for June: Determine the number of material equivalent units of production in the June 30 Finishing Department inventory, assuming that the first-in, first-out method is used to cost inventories and materials were added at the beginning of the process.