Exam 8: Process Costing

A process costing system was used for a department that began operations in January 2020. Approximately the same number of physical units, at the same degree of completion, were in work-in-process at the end of both January and February. Monthly conversion costs are allocated between ending work-in-process and units completed. Compared to the FIFO method, would the weighted-average method use the same or a greater number of equivalent units to calculate the monthly allocations? (CPA adapted) $\text { Equivalent Units for Weighted Aver age cmnpared to FIFO }$ January February A. Same Same B. Greater Same C. Greater Greater D. Same Greater

If the units in the beginning Work-in-Process Inventory are greater than the units in the ending Work-in-Process Inventory, then the units transferred out are:

Carmen Products makes four models of guitars. All of the models go through the same assembly line but they differ as to the materials used and the degree of finishing. The Basic model has a low gloss finish and goes immediately to Packaging upon completion in Assembly. The Super model and the Premium model go through a Buffing process upon completion in Assembly. They then go on to Packaging. The Deluxe model is the top of the line and goes first to Buffing from the Assembly, then to Special Polishing, then to Packaging. Carmen uses operations costing and allocates conversion costs based on the number of units processed in each department. Required: What is the cost per unit of each of the completed guitars?

If materials are only added at the end of the production process, then the degree of completion for materials of units in the ending Work-in-Process Inventory is always 0%.

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 is the equivalent unit cost for the conversion costs assuming Bentley uses weighted-average process costing?

Toxo Chemicals produces a solvent in its Glendale plant. Three chemicals are combined at the start of the process and blended under pressure for a period of time. At the 75% point of completion, an additional chemical is added. The following information has been gathered: Chernical Corversion Mix Additional Chernical Cost Gallons BWIP \ 5,000 -0- \ 3,000 10,000 Added 65,000 15,000 35,000 100,000 Toxo completed 98,000 gallons during the month. The process engineer informs you that the beginning WIP was at the 40% completion point, the ending WIP is at 70%. Toxo uses first-in, first out (FIFO) costing. Required: (use 4 decimal places in your calculations) a. Compute the equivalent units of production for each input. b. Compute the cost per equivalent unit. c. Compute the cost transferred out to finished goods. d. Compute the ending work-in-process inventory balance.

Job costing requires more detailed record keeping than process costing.

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 conversion costs per equivalent unit is:

The Miracle Company had 20,000 units in process on December 31, 2020 which was 80% complete as to materials but only 40% complete as to conversion costs. The company's records show 40,000 units were transferred to the Finished Goods Inventory during January 2021. On January 31, 2021, 15,000 units were on hand which were 30% complete as to conversion costs and 60% complete as to materials. What are the equivalent units of production (EUPs) for the conversion costs in January, assuming Miracle uses first-in, first-out (FIFO)?

Sparkle Inc. is a company that produces liquid cleaning products. Sparkle's management is trying to decide whether to install a job or process costing system. The manufacturing vice president has stated that job costing gives the best control because it is possible to assign costs to specific lots of goods. The controller, however, has stated that job costing requires too much record keeping. Would a process costing system meet the manufacturing vice president's control objectives? Explain.

The weighted-average method of process costing differs from the FIFO method of process costing in that the weighted-average method:

The Chart Company has a process costing system. All materials are added when the process is first begun. At the beginning of September, there were no units of product in process. During September 50,000 units were started; 5,000 of these were still in process at the end of September and were 3/5 finished. The equivalent units for the conversion costs in September were:

Nebraska Company uses the weighted-average method in its process costing system. The first processing department, the Welding Department, started the month with 18,000 units in its beginning work-in-process inventory that were 30% complete with respect to conversion costs. The conversion cost in this beginning work-in-process inventory was $44,820. An additional 90,000 units were started into production during the month. There were 21,000 units in the ending work-in-process inventory of the Welding Department that were 10% complete with respect to conversion costs. A total of $677,970 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.)

The Safety Chemical Company produces a special kind of body oil that is widely used by professional sports trainers. The oil is produced in three processes: Refining, Blending, and Mixing. Raw oil materials are introduced at the beginning of the refining process. A "mountain-air scent" material is added in the blending process when processing is 50% completed. The following Work-in-Process account for the Blending Department is available for the month of July. The July 1 Work-in-Process balance contains $5,920 in material costs and $1.56/unit in costs transferred in from the Refining Department. $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\text { Work-in-Process: Blending }$ \begin{array}{lr}\text {Beginning balance (8,000 \mathrm{gal}, 30 \% complete)}&\$22,850\\\text {Coststransferred in from Refining \( (29,000 \mathrm{gal} \)}&48,200\\\text { Materials } & 20,810 \\\text { Direct labor } & 5,748 \\\text { Overhead } & 11,600 \\\text { Ending balance }(4,000 \mathrm{gal}, 40 \% \text { complete }) & ? ?\end{array} The Safety Chemical Company uses weighted-average costing. Required: (Use 4 decimal places for computations.) (a) Compute the equivalent units of production for Blending. (b) Compute the unit costs in the Blending Department for the month of July. (c) Compute the costs transferred out to the Mixing Department for July. (d) Compute the July 31 Work-in-Process Inventory balance.

Galaxy Corporation uses the FIFO method in its process costing. The following data pertain to its Assembly Department for June. Units in process, June 1 : materials 55\% complete, conversion 15\% complete 800 Units started into production during June 5,200 Units completed and transferred to the next departrnent 4,300 Units in process, June 30 materials 50\% complete, conversion 40\% complete 1,700 Required: Determine the equivalent units of production for the Assembly Department for June using the FIFO method.

Tori Company uses the FIFO method in its process costing system. The first processing department, the Soldering Department, started the month with 17,000 units in its beginning work-in-process inventory that were 70% complete with respect to conversion costs. The conversion cost in this beginning work-in-process inventory was $101,150. An additional 68,000 units were started into production during the month. There were 23,000 units in the ending work-in-process inventory of the Soldering Department that were 80% complete with respect to conversion costs. A total of $565,125 in conversion costs were incurred in the department during the month. What would be the cost per equivalent unit for conversion costs? (Round your answer to 3 decimal places.)

Roubideaux Corporation uses process costing. The following data pertain to its Packing Department for February. Units in process, February 1: materials 85\% complete, conversion 70\% complete 500 Units started into production during February 6,900 Units completed and transferred to the next department 6,200 Units in process, February 28: materials 50\% complete, conversion 20\% complete 1,200 Required: Determine the equivalent units of production for materials and conversion costs for the Packing Department for February using the weighted-average method. Weighted-average method:

A process costing system:

In general, the ending Work-in-Process Inventory value computed using first-in, first-out (FIFO) will be the same as the ending value computed using weighted-average process costing.

The computation of equivalent units under the FIFO method: