Exam 8: Process Costing

Operation costing systems are used when the products have:

What characteristics of the production process would lead a company to use process costing rather than job costing?

The FIFO method provides a major advantage over the weighted-average method in that:

The more important individual unit costs are for making decisions, the more likely it is that process costing will be preferred to job costing. Do you agree?

Production and cost data for the month of February for Process A of the Packer Manufacturing Company follow: The company uses the weighted-average cost method in its process costing system. Required: a. Calculate the equivalent units and cost per equivalent unit for February for materials and for conversion costs (use three decimal places in your calculations). b. Determine the cost transferred to finished goods. c. Determine the amount of cost that should be assigned to the ending work-in-process.

The Finishing Department had 5,000 incomplete units in its beginning Work-in-Process Inventory which were 100% complete as to materials and 30% complete as to conversion costs. 15,000 units were received from the previous department. The ending Work-in-Process Inventory consisted of 2,000 units which were 50% complete as to materials and 30% complete as to conversion costs. The Finishing Department uses first-in, first-out (FIFO) process costing. - How many units were started and completed during the period?

In order to compute equivalent units of production using the FIFO method of process costing, work for the period must be broken down to units:

Bentley Enterprises uses process costing to control costs in the manufacture of Dust Sensors for the mining industry. The following information pertains to operations for November. (CMA Exam adapted) Units Work in process, Novernber 16,000 Started in production during Novernber 100,000 Wark in process, Novernber 3 24,000 The beginning inventory was 60% complete as to materials and 20% complete as to conversion costs. The ending inventory was 90% complete as to materials and 40% complete as to conversion costs. Costs pertaining to November are as follows: Beginning inventory: direct materials, $54,560; direct labor, $20,320; manufacturing overhead, $15,240. Costs incurred during the month: direct materials, $468,000; direct labor, $182,880; manufacturing overhead, $391,160. - What is the equivalent unit cost for materials assuming Bentley uses first-in, first-out (FIFO) process costing?

In a process costing system, the application of factory overhead usually would be recorded as an increase in: (CPA adapted)

The degree of completion associated with prior department costs is always 100%.

Garrison Corporation uses the FIFO method in its process costing system. Data concerning the first processing department for the most recent month are listed below: Beginning work-1n-process inventory: Units in beginning work-in-process inventory 600 Materials costs \ 6,600 Conversion costs \ 2,700 Percent complete with respect to materials 60\% Percent complete with respect to conversion 10\% Units started into production during the month 7,000 Materials costs added during the month \ 102,200 Conversion costs added during the month \ 259,200 Ending work-in-process inventory: Units in ending work-in-process inventory 1,500 Percent completewith respect to materials 55\% Percent complete with respect to conversion 10\% - How many units were started AND completed during the month in the first processing department?

The debits to Work-in-Process for Department #2 for the month of April of the current year, together with information concerning production, are presented below. All direct materials come from Department #1. The units completed include the 1,200 in process at the beginning of the period. Department #2 uses FIFO costing. - The unit cost of Product X started and completed in the current period is:

The number of units in the beginning Work-in-Process Inventory plus the units transferred out during the period equals the number of units started during the period plus the number of units in the ending Work-in-Process Inventory.

Highlite Corporation uses the weighted-average method in its process costing. The following data pertain to its Formulation Department for November. Units in process, November 1 : materials 85\% complete, conversion 75\% complete 700 Units started into production during November 5,500 Units completed and transferred to the next department 4,700 Units in process, November 30: materials 70\% complete, conversion 25\% complete 1,500 Required: Determine the equivalent units of production for materials and conversion costs for the Formulation Department for November using the weighted-average method.

Hsu Corporation uses the FIFO method in its process costing system. The following data concern the company's Grinding Department for the month of August. Cost in beginning work-in-process inventory \1 ,090 Units started and completed this month 2,670 Materials Conversion Cost per equivalent unit \ 17.80 \ 34.50 Equivalent units required to complete the units in beginning work-in-process inventory 180 160 Equivalent units in ending work-in-process inventory 120 99 Required: Determine the cost of units transferred out of the department and the cost of ending work-in-process inventory during August using the FIFO method.

If materials are only added at the beginning of the production process, then the degree of completion for materials in the ending Work-in-Process Inventory is always 100%.

In a weighted-average process costing system, the costs in the beginning Work-in-Process Inventory are not used to compute the costs transferred-out.

The Lakeside Company uses a weighted-average process costing system. The following data are available: Beginning inventory -0- Units started in production 20,000 Units finished during the period 16,000 Units in process at the end of the period (complete as to materials, 4,000 1/4 complete as to labor and overhead) Cost of materials used \ 35,200 Labor and overhead costs \ 37,400 - Cost per equivalent unit of materials is:

The Lakeside Company uses a weighted-average process costing system. The following data are available: Beginning inventory -0- Units started in production 20,000 Units finished during the period 16,000 Units in process at the end of the period (complete as to materials, 4,000 1/4 complete as to labor and overhead) Cost of materials used \ 35,200 Labor and overhead costs \ 37,400 - Equivalent units of production for labor and overhead are:

The debits to Work-in-Process for Department #2 for the month of April of the current year, together with information concerning production, are presented below. All direct materials come from Department #1. The units completed include the 1,200 in process at the beginning of the period. Department #2 uses FIFO costing. - The unit cost of Product X started in the prior period and completed in the current period is: