Exam 8: Process Costing

Fanciful Structures Company uses the weighted-average method in its process costing system. The first processing department, the Welding Department, started the month with 22,000 units in its beginning work-in-process inventory that were 20% complete with respect to conversion costs. The conversion cost in this beginning work-in-process inventory was $23,320. An additional 97,000 units were started into production during the month and 101,000 units were completed in the Welding Department and transferred to the next processing department. There were 18,000 units in the ending work-in-process inventory of the Welding Department that were 40% complete with respect to conversion costs. A total of $529,380 in conversion costs were incurred in the department during the month. What would be the cost per equivalent unit for conversion costs for the month? (Round your answer to 3 decimal places.)

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 1 16,000 Started in production during Novernber 100,000 Wark in process, Novernber 30 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 are the total costs in the ending Work-in-Process Inventory assuming Bentley uses weighted-average process costing?

Bentwood 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 900 Materials costs \ 17,100 Conversion costs \ 10,200 Percent complete with respect to materials 70\% Percent complete with respect to conversion 25\% Units started into production during the month 7,300 Units transferred to the next department during the month 6,100 Materials costs added during the month \ 148,200 Conversion costs added during the month \2 47,500 Ending work-in-process inventory: Units in ending work-in-process inventory 2,100 Percent completewith respect to materials 80\% Percent complete with respect to conversion 35\% - What are the equivalent units for materials for the month in the first processing department?

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 transferred-out during the period?

Seaside Company uses the weighted-average method in its process costing system. The Sanding Department started the month with 8,000 units in its beginning work-in-process inventory that were 70% complete with respect to conversion costs. An additional 69,000 units were transferred in from the prior department during the month to begin processing in the Sanding Department. There were 5,000 units in the ending work-in-process inventory of the Sanding Department that were 20% complete with respect to conversion costs. What were the equivalent units of production (EUPs) for conversion costs in the Sanding Department for the month?

The weighted-average approach to process costing combines the work and costs done in prior periods with the work and costs done in the current period.

Explain the major differences between weighted-average costing and FIFO costing.

Ralston Fine Hardwoods uses a process costing system to account for its wood processing plant. Beginning inventory consisted of 4,000 board feet of lumber (100% complete as to materials, 35% complete as to conversion). Ralston added 132,000 board feet into the process during April. On April 30, there were 10,000 board feet still in process (100% complete as to materials, 22% complete as to conversion). Required: (a) Calculate the equivalent units of production for each input, assuming Ralston uses weighted-average. (b) Calculate the equivalent units of production for each input, assuming Ralston uses FIFO.

In process 2, material G is added when a batch is 60% complete. Ending work-in-process units, which are 50% complete, would be included in the computation of equivalent units for: (CPA adapted) Conversion Costs Material G A. Yes No B. No Yes C. No No D. Yes Yes

Describe the five steps in preparing a production cost report.

What would happen to the equivalent units, production cost per unit and costs transferred out for a company using weighted-average if the degree of completion of the ending inventory were underestimated?

Sigman Co.'s inventories in process were at the following stages of completion at April 30: No. of Units Percent Complete 100 90 50 80 200 10 Equivalent units of production in ending inventory amounted to: (CPA adapted)

The Rosa Lee Manufacturing Company produces a single product in a single processing department. The material is added when 25% of the conversion costs have been added. The Work-in-Process Inventory account on April 30 includes the following information: Begirning balance \ 1,682(\ 600 is materials) Materials 5,325 Labor 10,863 Overhead 15,012 During the month, the company finished and transferred 72,000 units out of the Work-in-Process Inventory. 9,000 units were in process at the beginning of the month and were 40% complete. 8,000 units were in process at the end of the month and were 70% complete. The company uses weighted-average process costing. Required: (Use 4 decimal places for computations.) (a) Compute the equivalent units of production (EUP) for materials and conversion costs in April. (b) Compute the unit material costs and unit conversion costs for April. (c) Compute the total cost transferred out of the Work-in-Process inventory during the month of April. (d) Compute the cost of the ending Work-in-Process inventory for April.

The Phantom Corporation started 4,800 units during February. Phantom started the month with 700 units in process (40% complete) and ended the month with 400 units in process (40% complete). How many units were transferred to the Finished Goods Inventory during February?

Under which of the following conditions will the FIFO method produce the same cost of goods manufactured as the weighted-average method?

If the beginning Work-in-Process inventory is zero, first-in, first-out (FIFO) and weighted-average process costing will assign the same amount to the units transferred out.

Emerson, Inc. uses the FIFO method in its process costing system. The following data concern the operations of the company's first processing department, Mixing, for a recent month. Required: Using the FIFO method: a. Determine the equivalent units of production for materials and conversion costs. b. Determine the cost per equivalent unit for materials and conversion costs. c. Determine the cost of ending work-in-process inventory. d. Determine the cost of units transferred out of the department during the month.

Which of the following organizations would most likely use a process costing system?

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. - What are the equivalent units of production for conversion costs?

The following examples briefly describe the manufacture of two different products. Which costing method (job-order or process) would be the best method to use for each project? I. Steven Lawless manufactures Lawless Fine Wine Coolers. Steven once made the statement, "People can have any flavor of Lawless Fine Wine Coolers they want as long it's strawberry." II. Northridge Spacetronics is manufacturing three space shuttles for the country of Xanadu. Each shuttle is slightly different and production will last approximately two years. I II A. Process Process B. Job-Order Job-Order C. Process Job-Order D. Job-Order Process