Exam 8: Process Costing

Operation costing accounts for material costs like job costing and conversion costs like process costing

The Finishing Department had 5,000 incomplete units in its beginning Work-in-Process Inventory which were 100% complete as to materials and 30% complete as to conversion costs.15,000 units were received from the previous department.The ending Work-in-Process Inventory consisted of 2,000 units which were 50% complete as to materials and 30% complete as to conversion costs.The Finishing Department uses first-in,first-out (FIFO)process costing.What are the equivalent units of production for the conversion costs during the period?

Madison Corporation's production cycle starts in the Processing Department.The following information is available for April: Units Work-ir-process, April 1 (25\% complete) 40,000 Total units in process during April 280,000 Work-ir-process, April 30(60\% complete) 26,000 Materials are added at the beginning of the process in the Processing Department.What are the equivalent units of production for the month of April,assuming Madison uses the weighted-average method? Materials Comrersion Costs A. 240,000 260,000 B. 255,000 235,000 C. 280,000 270,000 D. 315,000 285,000

The equivalent unit concept refers to the actual amount of work during the period stated in terms of the work required to complete an equal number of whole units.

A process costing system was used for a department that began operations in January 2016.Approximately the same number of physical units,at the same degree of completion,were in work-in-process at the end of both January and February.Monthly conversion costs are allocated between ending work-in-process and units completed.Compared to the FIFO method,would the weighted-average method use the same or a greater number of equivalent units to calculate the monthly allocations? (CPA adapted)

The Finishing Department had 5,000 incomplete units in its beginning Work-in-Process Inventory which were 100% complete as to materials and 30% complete as to conversion costs.15,000 units were received from the previous department.The ending Work-in-Process Inventory consisted of 2,000 units which were 50% complete as to materials and 30% complete as to conversion costs.The Finishing Department uses first-in,first-out (FIFO)process costing.What are the equivalent units of production for materials during the period?

The following information pertains to Oklahoma Co.'s Tulsa Division for the month of April: All materials are added at the beginning of the process.Using the weighted-average method,the cost per equivalent unit of materials is: Units Materials Beginning Work-in-Process 15,000 \ 5,500 Started in April 40,000 \ 18,000 Units completed 42,500 Ending Work-ir-Process 12,500 (CPA adapted)

The debits to Work-in-Process for Department #2 for the month of April of the current year,together with information concerning production,are presented below. WOFKHNPPROCESS - DEPARTMENT \#2 1,200 units, 1/4 completed \ 1,200 Product X,6,200 units ???? From Dept. 1, 6,000 units 3,600 Direct Labor 8,000 Factory 4,800 1,000 units, 1/2 complete ???? All direct materials come from Department #1.The units completed include the 1,200 in process at the beginning of the period.Department #2 uses FIFO costing.The unit cost of Product X started in the prior period and completed in the current period is:

In a process costing system,the application of factory overhead usually would be recorded as an increase in: (CPA adapted)

The Finishing Department had 5,000 incomplete units in its beginning Work-in-Process Inventory which were 100% complete as to materials and 30% complete as to conversion costs.15,000 units were received from the previous department.The ending Work-in-Process Inventory consisted of 2,000 units which were 50% complete as to materials and 30% complete as to conversion costs.The Finishing Department uses first-in,first-out (FIFO)process costing.How many units were transferred-out during the period?

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. 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 weighted-average costing.Required (use 4 decimal places for computations): (a)Compute the equivalent units of production for Refining 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.

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 the conversion costs in the month of September assuming Townson uses weighted-average process costing?

An error was made by Marrow Company in computing the percentage-of-completion of the current year's ending Work-in-Process Inventory.The error resulted in the assignment of a lower percentage of completion to each component of the inventory than actually was the case.There was no beginning Work-in-Process Inventory.What is the effect of this error on (1)cost assigned to cost of goods completed for the period and (2)the computation of costs per equivalent unit?

The Phantom Corporation started and completed 4,800 units during February.Phantom started the month with 700 units in process (40% complete)and ended the month with 400 units in process (40% complete).How many units were transferred to the Finished Goods Inventory during February?

The Chart Company has a process cost system.All materials are added when the process is first begun.At the beginning of September,there were no units of product in process.During September 50,000 units were started;5,000 of these were still in process at the end of September and were 3/5 finished.The equivalent units for the conversion costs in September were:

Carmen Products makes four models of guitars.All of the models go through the same assembly line but they differ as to the materials used and the degree of finishing.The Basic model has a low gloss finish and goes immediately to Packaging upon completion in Assembly.The Super model and the Premium model go through a Buffing process upon completion in Assembly.They then go on to Packaging.The Deluxe model is the top of the line and goes first to Buffing from the Assembly,then to Special Polishing,then to Packaging.Carmen uses operations costing and allocates conversion costs based on the number of units processed in each department. Total Basic Super Premium Deluce Units 1,000 500 250 50 Materials \ 97,500 \ 40,000 \ 30,000 \ 20,000 \ 7,500 Conversion costs: Assembly \ 54,000 Buffing 32,000 Special 3,000 Polish Packaging 9,000 Total \ 98,000 Required: What is the cost per unit of each of the completed guitars?

The debits to Work-in-Process for Department #2 for the month of April of the current year,together with information concerning production,are presented below. WOFKHNPPROCESS - DEPARTMENT \#2 1,200 units, 1/4 completed \ 1,200 Product X,6,200 units ???? From Dept. 1, 6,000 units 3,600 Direct Labor 8,000 Factory 4,800 1,000 units, 1/2 complete ???? All direct materials come from Department #1.The units completed include the 1,200 in process at the beginning of the period.Department #2 uses FIFO costing.What are the total costs to be accounted for on the production cost report for Department #2 for the period?

Carlton Electronics manufactures three cell phone models,General,Premium,and Deluxe,which differ in the components included.Production takes place in two departments,Assembly and Special Packaging.Batches of General phones are made to service government military contracts.Premium model production phones are specific to corporate contracts.Deluxe model phones are sold commercially through big-box stores.Explain why operation costing might be a consideration for Carlton.

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 are the total costs in the ending Work-in-Process Inventory assuming Bentley uses first-in,first-out (FIFO)process costing?

In the computation of the manufacturing cost per equivalent unit,the weighted-average method of process costing considers: