Exam 3: Process Costing and Analysis

In a process costing system, with the exception of the first department, each department receives output from the prior department as a partially processed product.

During April, the production department of a process operations system completed and transferred to finished goods 18,000 units that were in process at the beginning of April and 90,000 units that were started and completed in April. April's beginning inventory units were 100% complete with respect to materials and 40% complete with respect to labor. At the end of April, 30,000 additional units were in process in the production department and were 100% complete with respect to materials and 60% complete with respect to labor. The beginning inventory included materials cost of $107,000 and the production department incurred direct materials cost of $329,000 during the month. Compute the direct materials cost per equivalent unit for the department using the weighted-average method.

A system of accounting in which costs are accumulated and then measured per unit at the end of a period by combining costs per equivalent unit from various departments is a:

If a production department has 100 equivalent units of production with respect to direct materials in a given reporting period, the equivalent units of production with respect to direct labor must also be 100.

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

A production department is an organizational unit that has the responsibility for the complete processing of one particular product.

The cost of units transferred from Work in Process Inventory to Finished Goods Inventory is called the cost of goods manufactured.

Materials and labor costs that are clearly associated with a specific process or department are known as ________. Those costs that are not clearly associated with a specific process or department are called ________.

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. During the month the department started 115,000 units and transferred 120,000 units to the next manufacturing department. 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 equivalent units for materials and conversion respectively for the Painting Department.

During July, the production department of a process operations system completed and transferred to finished goods 10,000 units that were in process at the beginning of July and 76,000 that were started and completed in July. July's beginning inventory units were 100% complete with respect to materials and 30% complete with respect to labor. At the end of July, 15,000 additional units were in process in the production department and were 100% complete with respect to materials and 25% complete with respect to labor. The beginning inventory included labor cost of $52,100 and the production department incurred direct labor cost of $450,750 during July. Compute the direct labor cost per equivalent unit for the department using the weighted-average method.