Exam 20: Process Cost Systems

In a process costing system, a separate work in process inventory account is maintained for each customer's job.

If the principal products of a manufacturing process are identical, a process cost system is more appropriate than a job order cost system.

The first step in determining the cost of goods completed and ending inventory valuation using process costing is to calculate equivalent units of production.

Use this information about Penny, Inc. to answer the questions that follow. ​ Penny, Inc. employs a process costing system. Direct materials are added at the beginning of the process. Here is information about the July activities: ​ ​ ​ -Using the FIFO method and rounding cost per unit to the nearest whole dollar, the cost of goods completed and transferred out during July was

If 16,000 units of materials enter production during the first year of operations, 12,000 of the units are finished, and 4,000 are 75% completed, the number of equivalent units of production would be 15,000.

Use this information about Department G to answer the questions that follow. ​ Department G had 3,600 units, 40% completed at the beginning of the period, 12,000 units were completed during the period, 2,000 units were 20% completed at the end of the period, and the following manufacturing costs were debited to the departmental work in process account during the period: ​ ​ -Assuming that all direct materials are placed in process at the beginning of production and that the first-in, first-out method of inventory costing is used, determine the equivalent units for direct materials and conversion costs, respectively.

A process cost system would be appropriate for a

A process cost accounting system records all actual factory overhead costs directly in the work in process account.

The journal entry to record the flow of costs into Department 1 for direct labor is

The total cost of units completed during the period was

The amount journalized showing the cost added to finished goods is taken from the cost of production report.

The total conversion costs for the period were

All direct materials are placed in process at the beginning of production, and the first-in, first-out method of inventory costing is used. What is the total cost of the units started and completed during the period (round unit cost calculations to whole dollars)?

Once equivalent units are calculated for materials, this number will also be used for direct labor and factory overhead.

Department E had 4,000 units in Work in Process that were 40% completed at the beginning of the period at a cost of $12,500. During the period, 14,000 units of direct materials were added at a cost of $28,700 and 15,000 units were completed. At the end of the period, 3,000 units were 75% completed. All materials are added at the beginning of the process. Direct labor was $32,450, and factory overhead was $18,710. The number of equivalent units of production for the period for conversion if the first-in, first-out method is used to cost inventories was

Mocha Company manufactures a single product by a continuous process involving three production departments. The records indicate that direct materials, direct labor, and applied factory overhead for Department 1 were $100,000, $125,000, and $150,000, respectively. Work in process at the beginning of the period for Department 1 was $75,000, and work in process at the end of the period totaled $60,000. The records indicate that direct materials, direct labor, and applied factory overhead for Department 2 were $50,000, $60,000, and $70,000, respectively. In addition, work in process at the beginning of the period for Department 2 totaled $75,000, and work in process at the end of the period totaled $60,000. The journal entry to record the flow of costs into Department 3 during the period is

The journal entry to record the flow of costs into Department 1 during the period for direct materials is

Both process and job order cost systems maintain perpetual inventory accounts with subsidiary ledgers.

Match each business that follows to the type of costing system (a or b) it would typically use. -Home construction

Determine the equivalent units of production used to compute the unit conversion cost on the cost of production report for Department W. Assume the company uses FIFO.