Exam 3: Process Costing and Analysis

Williams Company computed its cost per equivalent unit for direct materials to be $2.60 and its cost per equivalent unit for conversion to be $3.75. A total of 250,000 units of product were completed and transferred out as finished goods during the month, and 36,000 of equivalent units remained unfinished at the end of the month. The amount that should be reported in Finished Goods Inventory is:

During March, the production department of a process operations system completed and transferred to finished goods 25,000 units that were in process at the beginning of March and 110,000 units that were started and completed in March. March's beginning inventory units were 100% complete with respect to materials and 55% complete with respect to conversion. 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 conversion. Compute the number of physical units transferred to finished goods.

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

A system of accounting in which costs are accumulated and then measured per unit at the end of a period by combining costs per equivalent unit from various departments is a:

If indirect materials costing $37,500 that were not clearly linked with any specific production process or department were used during a reporting period, the following journal entry would be recorded in the process costing system:

At the beginning of the month, the Forming Department of Martin Manufacturing had 10,000 units in inventory, 30% complete as to materials, and 10% complete as to conversion. During the month the department started 60,000 units and transferred 62,000 units to the next manufacturing department. At the end of the month, the department had 8,000 units in inventory, 80% complete as to materials and 60% complete as to conversion. If Martin Manufacturing uses the FIFO method of process costing, compute the equivalent units for materials and conversion respectively for the Forming Department.

At the beginning of the month, the Forming Department of Martin Manufacturing had 10,000 units in inventory, 30% complete as to materials, and 10% complete as to conversion. During the month the department started 60,000 units and transferred 62,000 units to the next manufacturing department. At the end of the month, the department had 8,000 units in inventory, 80% complete as to materials and 60% complete as to conversion. How many units did the Forming Department start and complete in the current month?

Process costing systems are commonly used by companies that manufacture standardized products by passing them through a series of manufacturing steps.

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.

Grayson 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 90% 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.

A company uses the weighted average method for inventory costing. At the beginning of a period the production department had 20,000 units in beginning Work 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 Work in Process inventory and are 75% complete. Compute the number of equivalent units produced by the department.

If Department R uses $60,000 of direct materials and Department S uses $15,000 of direct materials, the following journal entry would be recorded by the process costing system:

Process costing systems use separate Work in Process Inventory accounts for each process.

A process cost summary is an accounting report that describes the costs charged to each department, the equivalent units of production by each department, and determining the costs assigned to each department's output.

A company uses a process costing system. Its Weaving Department completed and transferred out 120,000 units during the current period. The ending inventory in the Weaving Department consists of 40,000 units (20% complete with respect to direct materials and 60% complete with respect to conversion costs). Determine the equivalent units of production for the Weaving Department for direct materials and conversion costs assuming the weighted average method.

Refer to the following information about the Finishing Department in the Davidson Factory for the month of June. Davidson Factory uses the weighted-average method of inventory costing. Beginning Work in Process inventory: Physical units…………………………………………... 5,000 units % complete for materials………………………………. 70% % complete for labor and overhead……………………. 25% Materials cost from May……………………………….. $7,350 Labor and overhead cost from May……………………. $3,125 Product started and completed: Physical units…………………………………………… 40,000 units Ending Work in Process inventory: Physical units………………………………………….... 4,000 units % complete for materials………………………………. 40% % complete for labor and overhead……………………. 10% Manufacturing costs for June: Materials………………………………………………… $96,975 Labor and overhead……………………………………... $79,470 Compute the total cost of all units that were completed and transferred to finished goods during June. Compute the total cost of the ending Work in Process inventory.

Process costing is applied to operations with repetitive production and noncustomized products.

A key idea in process costing that refers to the number of units that could have been started and completed given the costs incurred during the period is known as:

If Grayson Manufacturing incurred $17,400 for direct labor in the assembly department and $10,300 for direct labor in the painting department, the journal entry to record the labor used is:

Dazzle, Inc. produces beads for jewelry making use. The following information summarizes production operations for June. The journal entry to record June production activities for direct material usage is: