Exam 20: Process Costing

If a department that applies process costing starts the reporting period with 50,000 physical units that were 25% complete with respect to direct materials and 40% complete with respect to direct labor,it must add 12,500 equivalent units of direct materials and 20,000 equivalent units of direct labor to complete them.

In some circumstances,a process cost accounting system can classify wages paid to maintenance workers as direct labor costs instead of factory overhead.

In process cost accounting,the classification of materials as direct or indirect depends on whether they are clearly linked with a specific process.

When raw materials are purchased on account for use in a process costing system,the corresponding journal entry that should be recorded will include:

In process cost accounting,all labor that is applied exclusively in a single production department is considered to be direct labor.

Which of the following statements is most accurate?

If Department Q uses $60,000 of direct materials and Department T uses $15,000 of direct materials,the following journal entry would be recorded by the process cost accounting system: Goods in Process Inventory,Department Q 60,000 Goods in Process Inventory,Department T 15,000 Raw Materials Inventory 75,000

During March,the production department of a process manufacturing system completed a number of units of a product and transferred them to finished goods.Of the units transferred,25,000 were in process at the beginning of March and 110,000 were started and completed in March.March's beginning inventory units were 100% complete with respect to materials and 55% complete with respect to labor.At the end of March,30,000 additional units were in process in the production department and were 100% complete with respect to materials and 30% complete with respect to labor.The production department incurred direct materials cost of $253,000 and its beginning inventory included materials cost of $93,500.Compute the direct materials cost per equivalent unit for the department using the weighted-average method.

A process cost summary includes the amounts of equivalent units of production for the period.

Direct labor and indirect labor are recorded,respectively,to:

Hou Company applies factory overhead to its production departments on the basis of 90% of direct labor costs.In the Assembly Department,Hou had $125,000 of direct labor cost,and in the Finishing Department,Hou had $35,000 of direct labor cost.The entry to apply overhead to these production departments is:

In a process cost accounting system,factory overhead costs can be allocated to production departments by using a predetermined overhead allocation rate.

Equivalent units of production are always the same as the total number of physical units finished during the period.

In a process cost accounting system,direct material costs incurred are recorded:

The process cost summary is an important managerial accounting report produced by a process cost accounting system.

Equivalent units of production refer to the number of units that would be completed if all effort during a period had been applied only to those units that were started and completed in a period.

In a process costing system,factory labor costs incurred in a reporting period are presented on the income statement as Factory Labor Expense.

Process costing is applied to operations with repetitive production and heterogeneous products.

Prepare general journal entries to record the following production activities for Sherman Manufacturing. a.Purchased $82,000 of raw materials on credit. b.Used $63,500 of direct materials in production. c.Used $12,800 of indirect materials.

In process costing there is never a balance remaining in Factory Overhead that needs to be closed at period end.