Exam 20: Process Cost Accounting

If a process has _______________ or _______________ inventory of partially completed production, equivalent units must be calculated so that total costs incurred during the period are assigned to all units worked on.

If a department that applies process costing starts the reporting period with 50,000 physical units that were 25% complete with respect to direct materials and 40% complete with respect to direct labor, it must add 12,500 equivalent units of direct materials and 20,000 equivalent units of direct labor to complete them.

Direct labor and indirect labor are recorded, respectively, to:

The process cost summary is an important managerial accounting report produced by a process cost accounting system.

Prepare journal entries to record the following production activities for Sherman Manufacturing. a. Incurred overhead costs of $79,000 (paid in cash). b. Applied overhead at 110% of direct labor costs which are $93,900. c. Transferred completed products with a cost of $258,200 to finished goods inventory. d. Sold $602,000 of product on credit. Cost is $271,000.

Which of the following statements is most accurate?

Which of the following is the best explanation for why it is necessary to calculate equivalent units of production in a process costing environment?

The process cost summary presents calculations of the cost of units completed during the reporting period, but does not present any information about the ending goods in process inventory.

In a process costing accounting system, factory wages are debited to _____________, and when direct labor is used, that account is credited and ____________________ is debited. When indirect labor is used, the ________________________ account is debited and ______________________ is credited.

In a process operation, the direct labor of a production department includes:

Embark produces mulch for landscaping use. The following information summarizes production operations for June. The journal entry to record June production activities for overhead allocation is:

The Machining Department started the current month with a beginning goods in process inventory of $10,000. During the month, it was assigned the following costs: direct materials, $76,000; direct labor, $24,000; and factory overhead, 50% of direct labor cost. Also, inventory with a cost of $109,000 was transferred out of the department to the next phase in the process. The ending balance of the Goods in Process Inventory account for the Machining Department is:

A company uses the weighted average method for inventory costing. During a period, a production department had 20,000 units in beginning goods in process inventory which were 40% complete; the department completed and transferred 165,000 units. At the end of the period, 22,000 units were in the ending goods in process inventory and are 75% complete. Compute the number of equivalent units produced by the department.

When the completed goods are sold, the cost of the completed goods are transferred to ___________________. ________________________________________

Hybrid costing systems can only be applied to auto manufacturing.

To determine unit cost under a process cost accounting system, equivalent units produced must be calculated if the company has goods in process inventories.

Harbor Manufacturing Company uses a process cost accounting system. Materials are added at the beginning of the process. Direct labor and overhead are added evenly throughout the process. The company uses monthly reporting periods for its weighted-average process cost accounting. The following are the operating and cost data information for October. The October 1 beginning Goods in Process Inventory consisted of 20,000 units. The costs for this inventory are $82,500 of direct materials, $24,400 of direct labor, and $48,800 of factory overhead. Factory overhead is applied at 200% of direct labor cost. In addition to the beginning inventory costs, the company issued the following costs into Goods in Process Inventory; direct materials, $240,000; direct labor, $68,000; factory overhead, $136,000. During October, the company completed and transferred 60,000 units of its product to finished goods. At the end of the month, the goods in process inventory consisted of 15,000 units that were 40% complete with respect to direct labor and factory overhead and 100% complete with respect to materials. Prepare the company's process cost summary for October using the weighted average method.

The following journal entry would be made to record the use of $6,100 of direct labor in a production department during the reporting period:

Process cost accounting systems consider overhead costs to include those costs that cannot be traced to a specific process.

A process cost summary involves computations and analysis at four sequential steps. These are (1) _________ (2) ___________, (3) _____________, and (4) ____________.