Exam 6: Process Costing

Abnormal spoilage is treated differently from normal spoilage in what way?

Figure 6-21 Golden Ring Company produces two types of product: Large and Larger. Two work orders for two batches of the products are shown below, along with some additional cost information: In the Mixing Department, conversion costs are applied on the basis of direct labor hours. Budgeted conversion costs for the department for the year were $50,000 for labor and $125,000 for overhead. Budgeted direct labor hours were 2,500. It takes three minutes to mix the ingredients needed for each bottle. Large (Work Order 10) and Larger (Work Order 11) flow through the Mixing Department first, then through the Cooking and Bottling departments. -Refer to Figure 6-21. What is Golden Ring Company's unit cost of Large?

The costing system that uses job-order procedures to assign direct material costs to batches and process procedures to assign conversion costs is called costing.

Figure 6-16 Ramses Corporation produces a product that passes through two processes. During April, the first department transferred 19,000 units to the second department. The cost of the units transferred was $30,000. Materials are added uniformly in the second process. The following information is provided about the second department's operations during October: Units, beginning work in process 4,000 Units, ending work in process 5,500 -Refer to Figure 6-16. The number of units completed in the second department during April is

GanMaoling Corporation produces a product that passes through two departments. For May, the following equivalent unit schedule was prepared for the first department: Costs assigned to beginning work in process: Materials: $51,000 Conversion: $24,750 Manufacturing costs incurred during the month: Materials: $56,250 Conversion: $45,000 Required: a. Compute the unit cost for May using the weighted average method. b. Determine the cost of goods transferred out. c. Determine the cost of ending work in process.

Figure 6-10 Julius Corporation's mixing department began January 2016 with 10,000 gallons of product (40 percent completed) in process. During January, Julius started 100,000 gallons of new product, of which 15,000 gallons remained in ending inventory (70 percent completed). -The following information pertains to the Springfield Company: Units Work-in-process inventory, June 1 (30% complete) 20,000 Units transferred in 50,000 Work-in-process inventory, June 30 (60% complete) 16,000 Materials are added at the start of the process. How many equivalent units for conversion costs would there be using the FIFO method?

Process systems are characterized by a larger number of homogeneous products passing through a series of processes.

Figure 6-6 Mannassass Company manufactures chairs. The following information was given for the company: Materials in the ending inventory were 100 percent complete and conversion in the ending inventory was 20 percent complete. -The following information pertains to Firewire Corporation: Units Work in process, November 1 (20% complete) 3,000 Started in November 24,000 Materials are added at the beginning of the process. If 18,000 units were completed during the month, ending work in process at November 30 is

The appropriate cost accounting system to use when inventory items are produced on an assembly line is

Figure 6-2 Leandro Corp. manufactures wooden desks. Production consists of three processes: cutting, assembly, and finishing. The following costs are given for April: There were no work in process inventories and 1,000 podiums were produced. -Which is TRUE about services?

The FIFO costing method recognizes that the work and costs carried over from the prior period legitimately belong to that period.

The weighted average method treats the equivalent output and costs in beginning work-in-process inventories as if they belong to the current period when calculating unit cost.

Countryview Company manufactures a product that passes through two processes. The following information is available for the first department for June: • All materials are added at the beginning of the process. • Beginning work in process consisted of 7,000 units that were 90 percent complete with respect to conversion. • Ending work in process consisted of 3,000 units that were 40 percent complete with respect to conversion. • There were 35,000 units started in process during the month. Required: a. Prepare a physical flow schedule. b. Compute equivalent units using the weighted average method.

Figure 6-11 Rawlings, Inc. manufactures a product that passes through two processes: mixing and molding. All manufacturing costs are added uniformly in the Mixing Department. Information for the Mixing Department for January follows: During January, 26,750 units were completed and transferred to the Molding Department. The following costs were incurred by the Mixing Department during January: -Phantom Enterprises adds materials to production at the beginning of the process in the Production Department. It uses a single-step process. Data on material for this department for July 2016 are as follows: Production data (units): Manufacturing cost: Work in process, beginning $39,000 Materials used in July $186,000 The company uses the FIFO inventory method. The materials cost in Work in Process on July 31 is

The method is a unit-costing method that merges prior-period work and costs with current period work and costs.

Lakeside Corporation produces two types of product: Normal and Extra. Two work orders for two batches of the products are shown below, along with some additional cost information: Batch size (bottles) 5,000 5,000 In the Mixing Department, conversion costs are applied on the basis of direct labor hours. Budgeted conversion costs for the department for the year were $200,000 for labor and $600,000 for overhead. Budgeted direct labor hours were 5,000. It takes 6 minutes to mix the ingredients needed for each bottle. Normal and Extra flow through the Mixing Department, followed by the Cooking and Bottling departments. Required: a. What are the conversion costs applied to Normal and Extra from the Mixing Department for each batch? b. Calculate the cost per bottle for Normal and Extra. c. Prepare the journal entries that record the costs of a batch of 5,000 bottles of Normal.

Figure 6-7 Edelstein Company had the following data for 2016: Units in process at the beginning of the month 4,000 Units in process at the end of the month 10,000 Units started during the month 40,000 Materials are added at the beginning of the process. Beginning work in process was 40 percent complete as to conversion. Ending work in process was 70 percent complete as to conversion. -The unit-costing method that excludes prior-period work and costs in computing current-period unit work and costs is called:

Victory, Inc., manufactures a product that passes through two processes: Mixing and Packaging. All manufacturing costs are added uniformly in the Mixing Department. Information for the Mixing Department for October follows: During October, 150,000 units were completed and transferred to Packaging. The following costs were incurred by the Mixing Department during October: There were 12,000 units that were 70 percent complete remaining in the Mixing Department at October 31. Use the weighted average method and round unit costs to two decimal places. Required: a. Determine the equivalent units of production for October. b. Determine the total costs to account for in October. c. Determine the total cost per equivalent unit of production. d. Calculate the cost of goods transferred to the Packaging Department. e. Calculate the cost of October's ending work in process for the Mixing Department.

Companies using JIT manufacturing do not use inventories for their process costing.

Figure 6-2 Leandro Corp. manufactures wooden desks. Production consists of three processes: cutting, assembly, and finishing. The following costs are given for April: There were no work in process inventories and 1,000 podiums were produced. -Which is NOT a feature of a process costing system?