Exam 8: Process Costing

First-in,first-out (FIFO)process costing transfers out the costs in beginning inventory before transferring out the costs associated with units started and completed.

Materials are added at the beginning of a process in a process costing system.The beginning Work-in-Process Inventory was 30% complete as to conversion costs.Using first-in,first-out (FIFO)process costing,the total equivalent units for material are:

It is possible for units in the beginning Work-in-Process Inventory to also be part of the ending Work-in-Process Inventory.

Tracker Sports is a manufacturer of sportswear.Tracker produces its products in two departments.The information for the current month for Department #2 is as follows: Beginning work-in-process 20,000 units Units transterred in from Dept \#1 40,000 units Units completed 50,000 units Ending work-in-process 10,000 units Beginning WIP transterred in costs \ 50,000 Beginning WIP direct materials \ 12,000 Beginning WIP direct labor \ 3,200 Beginning WIP ow erhead \ 1,600 Costs transterred in from Dept \# 1 \ 100,000 Direct material added during month \ 60,000 Direct manutacturing labor during month \ 20,000 Manufacturing overhead applied ??? Beginning WIP was half complete as to conversion costs.Direct materials for Department #2 are added when the process is 25% complete.Factory overhead is applied at a rate equal to 50 percent of direct manufacturing labor.Ending WIP was 60 percent complete.Tracker Sports uses weighted-average costing.Required: (HINT: use 4 decimal places in your calculations) a.Compute the equivalent units of production for each input.b.Compute the cost per unit.c.Compute the cost transferred out to finished goods.d.Compute the ending work-in-process inventory balance.

In October,one of the processing departments at Radiance Corporation had beginning work-in-process inventory of $29,000 and ending work-in-process inventory of $23,000.During the month,the cost of units transferred out from the department was $311,000.Required: Construct a cost reconciliation report for the department for the month of November.

In the weighted-average approach,the number of physical units transferred out cannot be greater than the equivalent number of units produced during the period.

If the beginning Work-in-Process inventory is zero,first-in,first-out (FIFO)and weighted-average process costing will assign the same amount to the units transferred out.

The Safety Chemical Company produces a special kind of body oil that is widely used by professional sports trainers.The oil is produced in three processes: Refining,Blending,and Mixing.Raw oil materials are introduced at the beginning of the refining process.A "mountain-air scent" material is added in the blending process when processing is 50% completed.The following Work-in-Process account for the Refining Department is available for the month of July.The July 1 Work-in-Process Inventory contains $1,500 in material costs.The following Work-in-Process account for the Blending Department is available for the month of July.The July 1 Work-in-Process inventory contains $5,920 in material costs,and $1.56/unit in costs transferred in from the Refining Department. Workin-Process: Refining Beginning balance ( 5,000 gal, 80\% complete) \ 6,500 Materials ( 30,000 gal.) 12,300 Direct labor 14,500 Overhead 21,750 Ending balance (6,000 gal., 2/3 complete) The Safety Chemical Company uses first-in,first-out (FIFO)costing for the Refining Department and weighted-average costing for the Blending Department.Required (use 4 decimal places for computations): Part 1: Refining Department (a)Compute the equivalent units of production for July.(b)Compute the material cost per unit and the conversion cost per unit for July.(c)Compute the costs transferred to the Blending Department for July.(d)Compute the July 31 Work-in-Process Inventory balance.Part 2: Blending Department (e)Compute the equivalent units of production.(f)Compute the unit costs in the Blending Department for the month of July.(HINT: There are three!!) (g)Compute the costs transferred out for July.(h)Compute the July 31 Work-in-Process Inventory balance.

An operations costing system is:

In order to compute equivalent units of production using the FIFO method of process costing,work for the period must be broken down to units:

The Lakeside Company uses a weighted-average process costing system.The following data are available: Beginning inventory -0 Units started in production 20,000 Units finished during the period 16,000 Units in process at the end of the period (complete as to materials, 1/4 complete as to labor and overhead) 4,000 Cost of materials used \ 35,200 Labor and overhead costs \ 37,400 Equivalent units of production for material are:

Is cost accumulation easier under a process costing system or a job-order costing system?

The Townson Manufacturing Company has gathered the following information for the month of September: • 6,000 units in the beginning Work-in-Process Inventory (75% complete as to materials,1/3 complete with respect to the conversion costs).• 60,000 units were started into production.• 50,000 units were completed and transferred to the next department.• The ending Work-in-Process Inventory is complete as to materials but only 3/8 complete with respect to conversion costs.What are the equivalent units of production (EUP)for materials in the month of September assuming Townson uses weighted-average process costing?

Pattern Corporation uses the FIFO method in its process costing.The following data pertain to its Cutting Department for August. Required: Compute the equivalent units of production for both materials and conversion costs for the Cutting Department for August using the FIFO method.

Which of the following organizations would most likely use a process costing system?

Bentley Enterprises uses process costing to control costs in the manufacture of Dust Sensors for the mining industry.The following information pertains to operations for November.(CMA Exam adapted) The beginning inventory was 60% complete as to materials and 20% complete as to conversion costs.The ending inventory was 90% complete as to materials and 40% complete as to conversion costs.Costs pertaining to November are as follows: Units Work in process, Nowember 1st 16,000 Started in production during Nov ember 100,000 Work in process, Nowember 3 24,000 Beginning inventory: direct materials,$54,560;direct labor,$20,320;manufacturing overhead,$15,240.Costs incurred during the month: direct materials,$468,000;direct labor,$182,880;manufacturing overhead,$391,160.What is the equivalent unit cost for materials assuming Bentley uses weighted-average process costing?

Paradise Inc.uses the weighted-average method in its process costing system.The following data concern the operations of the company's first processing department - Cutting - for a recent month. Work-ir-process, beginning: Units in process 100 Percent complete with respect to materials 70\% Percent complete with respect to conwersion 80\% Costs in the beginning inventory: Materials cost \ 525 Conversion cost \ 1,696 Units started into production during the month 11,000 Units completed and transterred out 10,700 Costs added to production during the month: Materials cost \ 83,405 Conversion cost \ 223,606 Work-in-process, ending: Units in process 400 Percent complete with respect to materials 50\% Percent complete with respect to conversion 20\% Required: Using the weighted-average method: a.Determine the equivalent units of production for materials and conversion costs.b.Determine the cost per equivalent unit for materials and conversion costs.c.Determine the cost of units transferred out of the department during the month.d.Determine the cost of ending work-in-process inventory in the department.

Kansas Company uses the weighted-average method in its process costing system.Operating data for the first processing department for the month of June appear below: Units Percent Complete with Respect to Comersion Beginning work-in- process inventory 11,000 50\% Started into production during June 98,000 Ending work-in- process inventory 21,000 80\% According to the company's records,the conversion cost in beginning work-in-process inventory was $46,915 at the beginning of June.Additional conversion costs of $825,183 were incurred in the department during the month.What was the cost per equivalent unit for conversion costs for the month? (Round to three decimal places. )

Sarfina Corporation uses the FIFO method in its process costing system.Operating data for the Casting Department for the month of September appear below: Units Percent Complete with Respect to Comrersion Beginning work-in-process imventory 15,000 20\% Transterred in from the prior department during September 89,000 Ending work-in-process imeentory 24,000 90\% According to the company's records,the conversion cost in beginning work-in-process inventory was $15,660 at the beginning of September.Additional conversion costs of $526,524 were incurred in the department during the month.What would be the cost per equivalent unit for conversion costs for September? (Round off to three decimal places. )

Bentley Enterprises uses process costing to control costs in the manufacture of Dust Sensors for the mining industry.The following information pertains to operations for November.(CMA Exam adapted) The beginning inventory was 60% complete as to materials and 20% complete as to conversion costs.The ending inventory was 90% complete as to materials and 40% complete as to conversion costs.Costs pertaining to November are as follows: Units Work in process, Nowember 1st 16,000 Started in production during Nov ember 100,000 Work in process, Nowember 3 24,000 Beginning inventory: direct materials,$54,560;direct labor,$20,320;manufacturing overhead,$15,240.Costs incurred during the month: direct materials,$468,000;direct labor,$182,880;manufacturing overhead,$391,160.What is the equivalent unit cost for the conversion costs assuming Bentley uses first-in,first-out (FIFO)process costing?