Exam 17: Process Costing

Ford Motor Company is said to use a hybrid costing system. What is a hybrid costing system, and what would be the advantage to Ford of such a system?

The last step in a process-costing system is to compute cost per equivalent unit.

Which of the following most accurately describes the contrast between process and job costing?

Serile Pharma places 800 units in production during the month of January. All 800 units are completed during the month. It had no opening inventory. Direct material costs added during January was $74,000 and conversion costs added during January was $8400. What is the total cost per unit of the product produced during January?

Transferred-in costs are treated as if they are ________.

Assembly department of Zahra Technologies had 100 units as work in process at the beginning of the month. These units were 45% complete. It has 200 units which are 20% complete at the end of the month. During the month, it completed and transferred 500 units. Direct materials are added at the beginning of production. Conversion costs are allocated evenly throughout production. Zahra uses weighted-average process-costing method. What is the total equivalent units in ending inventory for assignment of direct materials cost?

The first-in, first-out process-costing method assumes that the earliest equivalent units in work in process are completed first.

In a period of falling prices, the lower cost of goods sold under the FIFO method leads to higher operating income and higher tax payments.

Shiffon Electronics manufactures music player. Its costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department, the Programming department, and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Shiffon Electronics uses weighted-average costing. The following information is available for the month of March 2017 for the Assembly department. What is the direct materials cost per equivalent unit during March? (round to the nearest dollar)

Shining Star Company uses an automated process to clean and polish its souvenir items. For March, the company had the following activities: Direct materials are placed into production at the beginning of the process and conversion costs are incurred evenly throughout the process. Required: Prepare a production cost worksheet using the FIFO method.

The Swivel Chair Company manufacturers a standard recliner. During February, the firm's Assembly Department started production of 145,000 chairs. During the month, the firm completed 183,000 chairs and transferred them to the Finishing Department. The firm ended the month with 24,000 chairs in ending inventory. All direct materials costs are added at the beginning of the production cycle. Weighted-average costing is used by Swivel. Of the 145,000 units Swivel started during February, how many were finished during the month?

Direct Disk Drive Company operates a computer disk manufacturing plant. Direct materials are added at the end of the process. The following data were for June 2017: How many units must be accounted for during the period?

Jordana Woolens is a manufacturer of wool cloth. The information for March is as follows: Beginning work in process was half converted as to labor and overhead. Direct materials are added at the beginning of the process. All conversion costs are incurred evenly throughout the process. Ending work in process was 60% complete. Required: Prepare a production cost worksheet using the weighted-average method. Include any necessary supporting schedules.

Four Seasons Company makes snow blowers. Materials are added at the beginning of the process and conversion costs are uniformly incurred. At the beginning of September, work in process is 40% complete and at the end of the month it is 60% complete. Other data for the month include: Required: a.Prepare a production cost worksheet with supporting schedules using the weighted-average method of process costing. b.Prepare journal entries to record transferring of materials to processing and from processing to finished goods.

Direct Disk Drive Company operates a computer disk manufacturing plant. Direct materials are added at the end of the process. The following data were for August 2017: Calculate equivalent units for conversion costs using the FIFO method.

An operation-costing system is a hybrid-costing system applied to batches of similar, but NOT identical, products.

Dessa Cabinetry, Inc., manufactures standard sized modular cabinet units for kitchens and other applications within the home. Its costing system utilizes two cost categories, direct materials and conversion costs. Each product must pass through the rough cut department and the finish department. Direct materials are added at the beginning of production. Conversion costs are allocated evenly throughout production. How many units were completed and transferred out of the Finishing Department during March?

The accuracy of the completion estimate of conversion costs depends on the care, skill, and experience of the estimator and also the nature of the conversion process.

A distinctive feature of the FIFO process costing method is that the work done on beginning inventory before the current period is kept separate from work done in the current period.

From an accounting standpoint, favorable cost variances are debit entries, while unfavorable ones are credits.