Exam 20: Process Cost Accounting

A process cost summary for a production department accounts for all costs assigned to that department during the period plus costs that were in the department's Goods in Process Inventory account at the beginning of the period.

Equivalent units of production is an engineering term used to describe the process by which one company attempts to manufacture units of a product that are equivalent to the product manufactured by a competitor.

Nano Company uses a weighted average process cost system. The department started and finished 149,000 units during the current period. The ending inventory consists of 60,000 units that are 75% complete with respect to direct labor and overhead. All direct materials are added at the beginning of the process. The department incurred direct labor costs of $262,500 and overhead costs of $126,000. (a) Compute the equivalent cost per unit for direct labor. (b) Compute the equivalent cost per unit for overhead.

A company's January 1 goods in process inventory contained 30,000 units that were 25% complete with respect to direct labor. The beginning inventory was completed this year and another 120,000 units were started. Of those started, 80,000 were finished and the remaining 40,000 were left 20% complete. Calculate the equivalent units of production for the year using the weighted average method.

The third step in accounting for production activity in a period is to compute the ____________________.

If a department that uses process costing starts the reporting period with 100,000 physical units that were 20% complete with respect to direct labor, it must add 80% direct labor in the current period to complete the units.

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 equivalent units for direct materials, direct labor and overhead for June.

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

Hybrid systems contain aspects of both process and job order operations.

Which of the following is not one of the four steps in accounting for production activity and assigning costs during a period under a process cost system?

If the predetermined overhead allocation rate is 85% of direct labor cost, and the Painting Department's direct labor cost for the reporting period is $20,000, the following entry would be made to record the allocation of overhead to the products processed in this department:

A company's beginning work in process inventory consisted of 20,000 units that were 1/5 complete with respect to direct labor. These beginning units were completed and another 90,000 units were started during the current period. Of those started, 60,000 were finished and the remaining 30,000 were 1/3 complete at the end of the period. Using the weighted-average method, the equivalent units of production with regard to direct labor were:

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 equivalent cost per unit for direct materials, direct labor and overhead for June.

In a process cost accounting system, factory overhead costs can be allocated to production departments by using a predetermined overhead allocation rate.

Why is the Process Cost Summary important to management and how does the Process Cost Summary accomplish its purposes?

A company uses a process cost accounting system. Its Sewing Department completed and transferred out 120,000 units during the current period. The ending inventory in the Sewing Department consists of 40,000 units (20% complete with respect to direct materials and 60% complete with respect to direct labor). Overhead is applied on the basis of direct labor. Determine the equivalent units of production for the Sewing Department for direct materials, direct labor and overhead assuming the weighted average method.

Process manufacturing, also called process operations or process production, is the ___________ production of products in a _____________________ flow of steps.

The following data is available for Osman Corp. for the current year: Calculate the equivalent units of production for the year using the weighted average method.

In a process cost accounting system, direct material costs incurred are recorded:

During March, the production department of a process manufacturing system completed a number of units of a product and transferred them to finished goods. Of the units transferred, 25,000 were in process at the beginning of March and 110,000 were started and completed in March. March's beginning inventory units were 100% complete with respect to materials and 55% complete with respect to labor. At the end of March, 30,000 additional units were in process in the production department and were 100% complete with respect to materials and 30% complete with respect to labor. The production department incurred direct materials cost of $253,000 and its beginning inventory included materials cost of $93,500. Compute the direct materials cost per equivalent unit for the department using the weighted-average method.