Exam 3: Process Costing and Analysis

During March, the production department of a process operations system completed and transferred to finished goods 25,000 units that were in process at the beginning of March and 110,000 that were started and completed in March. March's beginning inventory units were 100% complete with respect to materials and 55% complete with respect to conversion. 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 conversion. Compute the number of equivalent units with respect to both materials and conversion respectively for March using the FIFO method.

In a process costing system, the entry to record cost of materials assigned to a production department requires a debit to the Work in Process Inventory account for that department and a credit to the Raw Materials Inventory account.

A company uses a process costing system. Its Welding Department completed and transferred out 100,000 units during the current period. The ending inventory in the Welding Department consists of 30,000 units (75% complete with respect to direct materials and 40% complete with respect to conversion costs). Determine the equivalent units of production for the Welding Department for direct materials and conversion costs assuming the weighted average method.

A process cost summary involves computations and analysis at four sequential steps. These are (1) ________ (2) ________, (3) ________, and (4) ________.

The third step in accounting for production activity in a period, before assigning and reconciling costs, is to compute the ________.

Richards Corporation uses the weighted-average method of process costing. The following information is available for October in its Fabricating Department: Units: Beginning Inventory: 80,000 units, 60% complete as to materials and 20% complete as to conversion. Units started and completed: 250,000. Units completed and transferred out: 330,000. Ending Inventory: 30,000 units, 40% complete as to materials and 10% complete as to conversion. Costs: Costs in beginning Work in Process - Direct Materials: $37,200. Costs in beginning Work in Process - Conversion: $79,700. Costs incurred in October - Direct Materials: $646,800. Costs incurred in October - Conversion: $919,300. Calculate the cost per equivalent unit of conversion.

The following data are available for a company's manufacturing activities: If materials are added when the production process begins and conversion costs are applied uniformly throughout the process, what are the equivalent units for direct materials and for conversion, respectively using the FIFO method of process costing?

A company uses the weighted average method for inventory costing. At the beginning of a period the production department had 20,000 units in beginning Work in Process inventory which were 40% complete; the department completed and transferred 165,000 units. At the end of the period, 22,000 units were in the ending Work in Process inventory and are 75% complete. Compute the number of equivalent units produced by the department.

Which of the following is the best explanation for why it is necessary to calculate equivalent units of production in a process costing environment?

Equivalent units of production is an engineering term used to describe the process by which one company attempts to manufacture units of a product that are equivalent to the product manufactured by a competitor.

Prepare general journal entries to record the following production activities for Oaks 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.

If the indirect labor cost in August for clerical and maintenance that help production in all departments was $123,000, the following journal entry would be recorded in a process costing system:

During the year, LT Corp. introduced 132,000 units into production and 144,000 units were completed and transferred to finished goods. At the end of the year, the company had 13,600 units in process that were 80% complete. Determine how many units the company had in Work in Process at the beginning of the year.

A company uses a process costing system. Its Assembly Department's beginning inventory consisted of 30,000 units, 75% complete with respect to direct labor and overhead. The department completed and transferred out 127,500 units this period. The ending inventory consists of 20,000 units that are 25% complete with respect to direct labor and overhead. All direct materials are added at the beginning of the process. The department incurred direct labor costs of $24,000 and overhead costs of $32,000 for the period. Assuming the weighted average method, the direct labor cost per equivalent unit (rounded to the nearest cent) is:

The use of process costing is of little benefit to a service type of operation.

In a process costing system, direct materials used are debited to the ________ account, and indirect materials used are debited to the ________ account.

At the beginning of the month, the Painting Department of Skye Manufacturing had 20,000 units in inventory, 70% complete as to materials, and 20% complete as to conversion. The cost of the beginning inventory, $28,650, consisted of $22,400 of material costs and $6,250 of conversion costs. During the month the department started 115,000 units and transferred 120,000 units to the next manufacturing department. Costs added in the current month consisted of $229,600 of materials costs and $540,500 of conversion costs. At the end of the month, the department had 15,000 units in inventory, 40% complete as to materials and 10% complete as to conversion. If Skye Manufacturing uses the weighted average method of process costing, compute the costs per equivalent unit of materials and conversion respectively for the Painting Department.

Which of the following characteristics does not usually apply to process operations systems?

Conversion cost per equivalent unit is the combined cost of direct labor and factory overhead per equivalent unit.

If the predetermined overhead allocation rate is 75% of direct labor cost, and the Assembly Department's direct labor cost for the reporting period is $20,000, the following entry would be made to record the allocation of overhead to the products processed in this department: