Exam 20: Process Cost Accounting

After all process cost accounting journal entries are recorded and posted for a reporting period, the Factory Payroll account should have a zero balance.

Embark produces mulch for landscaping use. The following information summarizes production operations for June. The journal entry to record June production activities for direct material usage 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. All of these are with respect to labor. The production department had labor costs in the beginning goods is process inventory of $99,000 and total labor costs added during the period are $726,825. Compute the equivalent cost per unit for labor.

A process cost summary is an accounting report that describes the costs charged to a department, the equivalent units of production by the department, and how the costs were assigned to the output.

The FIFO method does not use the beginning inventory costs in computing the cost per equivalent unit for the current period.

At the beginning of the recent period, there were 900 units of product in a department, one-third completed. These units were finished and an additional 5,000 units were started and completed during the period. 800 units were still in process at the end of the period, one-fourth completed. Using the weighted average method, the equivalent units produced by the department were:

Aniston Enterprises manufactures stylish hats for sophisticated women. All materials are introduced at the beginning of the manufacturing process in the Cutting Department. Conversion costs are incurred uniformly throughout the manufacturing process. As the cutting of material is completed, the pieces are immediately transferred to the Sewing Department. Information for the Cutting Department for the month of May follows. Goods in Process, May 1 (50,000 units, 100% complete for direct materials, 40% complete with respect to direct labor and overhead; includes $70,500 of direct material cost; $34,050 of conversion costs). Goods in Process, May 31 (75,000 units, 100% complete for direct materials; 20% complete for conversion costs). If Aniston Enterprises uses the FIFO method of process costing, compute the equivalent units for materials and conversion costs respectively for May.

The managers of process manufacturing systems focus on the series of processes needed to complete the production of products.

Refer to the following information about the Dipping Department of the Indiana Factory for the month of August. Indiana Factory uses the FIFO method of inventory costing. The cost per equivalent unit of materials is $10.00, and the cost per equivalent unit of labor and overhead is $22.00. Prepare a cost reconciliation for the month of August.

One section of the process cost summary describes the equivalent units of production for the department during the reporting period and presents the calculations of the costs per equivalent unit.

The last step in the four-step accounting procedure for process costing is the calculation of equivalent units of production.

If Department G uses $53,000 of direct labor and Department H uses $21,000 of direct labor, the following journal entry would be recorded using a process cost accounting system:

A system of accounting in which the costs of each process are accumulated and then assigned to the units of product that passed through the process is a:

Prepare general journal entries to record the following production activities for Sherman Manufacturing. a. Purchased $82,000 of raw materials on credit. b. Used $63,500 of direct materials in production. c. Used $12,800 of indirect materials.

Refer to the following information about the Painting Department in the Richardson Factory for the month of June. Richardson Factory uses the FIFO method of inventory costing. Compute the total cost of all units that were completed and transferred to finished goods during June. Compute the total cost of the ending goods in process inventory.

Browning Company had 8,700 units in beginning inventory with accumulated costs for direct materials of $17,900, $16,500 direct labor, and $13,200 of overhead. During July, the company completed and transferred 50,000 units to finished goods. Costs incurred in the current period included $45,000 of direct materials, $58,500 of direct labor, and $46,800 of factory overhead. Ending inventory consisted of 12,000 units which were 80% complete with respect to materials and 50% complete with respect to labor and overhead. Compute the value assigned to ending inventory based on the weighted average method of inventory costing.

To compute equivalent units of production, one must be able to reasonably estimate:

Que Corporation uses a process cost accounting system. The company manufactured certain goods at a cost of $800 and sold them on credit to Are Corporation for $1,075. The complete journal entry to be made by Que at the time of this sale is:

Briefly explain the conditions under which job order cost accounting systems and process cost accounting systems are commonly applied.

A ____________________ contains features of both process and job order operations.