Exam 15: Process-Costing Systems

The need to distribute the cost of making the batch of units that are still in process and to units that have been completed during the period is central to process costing.

Most process costing systems use weighted average process costs.Which of the following is a characteristic of weighted average process costs systems?

Suppose Hill Manufacturing began production in January with zero units in process.During January, Hill started production of 18,000 units and completed 15,500 units by January 31.Manufacturing costs totaled $68,800 ($43,200 for materials and $25,600 for labor and overhead).How much cost is allocated to WIP ending inventory?

An advantage of standard process costing is that it is cost effective and relatively simple to compute standard costs.

One difference in job costing and process costing is that we do not need to allocate costs between completed and in-process units in a job-costing system.

Process costing systems are suitable for firms that produce customized products in small amounts.

Conversion cost includes both direct material and indirect material.