Exam 18: Process Costing

In a process costing system that uses equivalent units of production,the per-unit cost of direct materials equals the total cost of materials used in the current month divided by the number of units completed and transferred during the current month.

The Finishing Department of Berle Industries works on only one product,and all costs are incurred uniformly while these units remain in the department.On March 1,6,000 units were in process that were 45% completed.An additional 60,000 units were transferred into the Finishing Department during March.At March 31,there were 25,000 units in process that were 75% completed.Compute the equivalent units of production for the Finishing Department during March.

Equivalent units of production represent units of:

Job order costing involves averaging costs across products produced,and as such,the first step in job order costing is to clearly understand the physical flows.

In most process costing systems,the number of units "in process" at any one time is usually significant relative to the total production output of the period.

Which of the following is not a characteristic of a process costing system?

A process costing system is highly desirable when a company mass produces identical goods.

Costs flow through a process costing system in the same sequence as actual products move through the assembly process.

Department X of a manufacturing company works on only one product,and all costs are incurred uniformly as the product goes along the assembly line.The 8,000 units in process on December 1 were 60% completed.An additional 50,000 units were placed in production during December.At December 31,the 10,000 units in process were 60% completed.The equivalent units of production during December amounted to:

Process costing system-determining unit costs Houston Oil Company uses a process costing system with two departments: (a)a Refining Department and (b)a Packaging Department.During June,its first month of operations,the company manufactured and sold 650,000 gallons of motor oil,generating total revenue of $3,845,000.The company incurred the following manufacturing costs in June: (a)How much was the unit cost per gallon of oil processed by the Refining Department in June? (b)If each case of oil contains four gallons,how much was the unit cost per case incurred by the Packaging Department in June? (c)How much was the unit cost per case transferred to finished goods in June? (Round your final answer to one decimal place.) (d)How much total gross profit was generated by the company in June? (Do not round intermediate calculations)

The computation of equivalent units is generally not necessary when:

The Work in Process - Assembly account would be credited and the Work in Process - Packaging account would be debited when:

For which of the following categories is it not important to know the number of units?

During the month of June,$352,150 of costs were transferred from Department A to Department B.The journal entry to summarize the transfer of these costs includes:

Process costing with equivalent units and beginning inventory The records of Westminster Manufacturing Company for the month of May show the following costs in Department A: The beginning inventory for May consisted of 10,000 units which were 80% complete as to direct materials and 60% complete as to labor and overhead.A total of 100,000 units were completed and transferred out during May,and 20,000 units remained in the work in process inventory.The ending inventory was 80% complete as to direct materials and 40% complete as to labor and overhead.Compute the following: (a)Direct materials cost per equivalent unit: $_______________ (b)Equivalent units of production for direct labor and overhead: ________________ (c)Total cost of 100,000 units completed: $________________ (d)Total cost of 20,000 units in process at the end of the month: $________________

If beginning inventory in Work in Process is zero and 2,000 units are started during the period,assuming that 1,700 units were completed and transferred out,how many units remain in ending inventory?

Process costing does not:

Process costing systems:

Manufacturing overhead is not applied to products when a process costing system is used.

A process costing system differs from a job order costing system in that: