Question 1

What is meant by equivalent units of production, and why are they important when a process costing system is used?

Accepted Answer

Equivalent units of production refers to

Question 2

In a process costing system, the purchase of raw materials is debited to the Raw Materials Inventory.

Accepted Answer

A) True 
 B)False

Question 3

The Fabricating Department started the current month with a beginning Work in Process inventory of $10,000. During the month, it was assigned the following costs: direct materials, $76,000; direct labor, $24,000; and factory overhead, 50% of direct labor cost. Also, inventory with a cost of $109,000 was transferred out of the department to the next phase in the process. The ending balance of the Work in Process Inventory account for the Fabricating Department is:

Accepted Answer

A)  $13,000. 
B)  $56,000. 
C)  $59,000. 
D)  $110,000. 
E)  $165,000. 
A)  $13,000. 
B)  $56,000. 
C)  $59,000. 
D)  $110,000. 
E)  $165,000.

Question 4

Sparky Corporation uses the FIFO method of process costing. The following information is available for February in its Molding Department: Units:
Beginning Inventory: 25,000 units, 100% complete as to materials and 55% complete as to conversion.
Units started and completed: 110,000.
Units completed and transferred out: 135,000.
Ending Inventory: 30,000 units, 100% complete as to materials and 30% complete as to conversion.
Costs:
Costs in beginning Work in Process - Direct Materials: $43,000.
Costs in beginning Work in Process - Conversion: $48,850.
Costs incurred in February - Direct Materials: $287,000.
Costs incurred in February - Conversion: $599,150.
Calculate the equivalent units of conversion.

Accepted Answer

A)  165,000 
B)  130,250 
C)  140,000 
D)  144,000 
E)  110,000 
A)  165,000 
B)  130,250 
C)  140,000 
D)  144,000 
E)  110,000

Question 5

Process costing systems are commonly used by companies that produce a large volume of standardized units on a continuous basis.

Accepted Answer

A) True 
 B)False

Question 6

Prepare journal entries to record the following production activities for Oaks Manufacturing.
a. Incurred overhead costs of $79,000 (paid in cash).
b. Applied overhead at 110% of direct labor costs which are $93,900.
c. Transferred completed products with a cost of $258,200 to finished goods inventory.
d. Sold $602,000 of product on credit. Cost is $271,000.

Accepted Answer

The answer of Prepare journal entries to record the following...

Question 7

In process costing, direct labor includes only the labor that is applied directly to individual units of product.

Accepted Answer

A) True 
 B)False

Question 8

Sparky Corporation uses the FIFO method of process costing. The following information is available for February in its Molding Department: Units:
Beginning Inventory: 25,000 units, 100% complete as to materials and 55% complete as to conversion.
Units started and completed: 110,000.
Units completed and transferred out: 135,000.
Ending Inventory: 30,000 units, 100% complete as to materials and 30% complete as to conversion.
Costs:
Costs in beginning Work in Process - Direct Materials: $43,000.
Costs in beginning Work in Process - Conversion: $48,850.
Costs incurred in February - Direct Materials: $287,000.
Costs incurred in February - Conversion: $599,150.
Calculate the equivalent units of materials.

Accepted Answer

A)  165,000 
B)  144,000 
C)  140,000 
D)  130,250 
E)  110,000 
A)  165,000 
B)  144,000 
C)  140,000 
D)  130,250 
E)  110,000

Question 9

A company uses the weighted-average method for inventory costing. At the end of the period, 22,000 units were in the ending Work in Process inventory and are 100% complete for materials and 75% complete for conversion. The equivalent costs per unit are materials, $2.65 and conversion $5.35. Compute the cost that would be assigned to the ending Work in Process inventory for the period.

Accepted Answer

A)  $146,575. 
B)  $176,000. 
C)  $87,725. 
D)  $93,775. 
E)  $132,000. 
A)  $146,575. 
B)  $176,000. 
C)  $87,725. 
D)  $93,775. 
E)  $132,000.

Question 10

A ________ contains features of both process and job order costing systems.

Accepted Answer

hybrid cos

Question 11

Wilturner Company incurs $97,000 of labor related directly to the product in the Assembly Department, and $10,000 of labor for services that help production in both the Assembly and Finishing departments. The amount of direct labor and factory overhead respectively are:

Accepted Answer

A)  $74,000 and $33,000. 
B)  $97,000 and $10,000. 
C)  $84,000 and $23,000. 
D)  $107,000 and $0. 
E)  $74,000 and $10,000. 
A)  $74,000 and $33,000. 
B)  $97,000 and $10,000. 
C)  $84,000 and $23,000. 
D)  $107,000 and $0. 
E)  $74,000 and $10,000.

Question 12

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 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 labor cost of $578,900 and its beginning inventory included labor cost of $54,700. Compute the direct labor cost per equivalent unit for the department using the weighted-average method.

Accepted Answer

A)  $4.69. 
B)  $3.84. 
C)  $4.86. 
D)  $4.28. 
E)  $4.40. 
A)  $4.69. 
B)  $3.84. 
C)  $4.86. 
D)  $4.28. 
E)  $4.40.

Question 13

Luker Corporation uses a process costing system. The company had $160,500 of beginning Finished Goods Inventory on October 1. It transferred in $837,000 of units completed during the period. The ending Finished Goods Inventory balance on October 31 was $158,200. The entry to account for the cost of goods sold in October is:

Accepted Answer

A)  Debit Cost of Goods Sold $837,000; credit Finished Goods Inventory $837,000. 
B)  Debit Cost of Goods Sold $839,300; credit Work in Process Inventory $839,300. 
C)  Debit Finished Goods Inventory $837,000; credit Work in Process Inventory $837,000. 
D)  Debit Finished Goods Inventory $158,200; credit Cost of Goods Sold $158,200. 
E)  Debit Cost of Goods Sold $839,300; credit Finished Goods Inventory $839,300. 
A)  Debit Cost of Goods Sold $837,000; credit Finished Goods Inventory $837,000. 
B)  Debit Cost of Goods Sold $839,300; credit Work in Process Inventory $839,300. 
C)  Debit Finished Goods Inventory $837,000; credit Work in Process Inventory $837,000. 
D)  Debit Finished Goods Inventory $158,200; credit Cost of Goods Sold $158,200. 
E)  Debit Cost of Goods Sold $839,300; credit Finished Goods Inventory $839,300.

Question 14

A process cost summary is a managerial accounting report that describes all but which of the following:

Accepted Answer

A)  The gross profit earned on the sale of products. 
B)  The equivalent units of production by the department. 
C)  How the costs were assigned to the output. 
D)  Physical transfers for a department. 
E)  The costs charged to a department. 
A)  The gross profit earned on the sale of products. 
B)  The equivalent units of production by the department. 
C)  How the costs were assigned to the output. 
D)  Physical transfers for a department. 
E)  The costs charged to a department.

Question 15

Refer to the following information about the Shaping Department of the Minnesota Factory for the month of August. Minnesota Factory uses the weighted average method of inventory costing.
   The cost per equivalent unit of materials is $10.00, and the cost per equivalent unit of labor and overhead is $22.00. Compute the cost that should be assigned to the units that were started and completed during August.

Accepted Answer

The answer of Refer to the following information about the...

Question 16

Williams Company computed its cost per equivalent unit for direct materials to be $2.60 and its cost per equivalent unit for conversion to be $3.75. A total of 250,000 units of product were completed and transferred out as finished goods during the month, and 36,000 of equivalent units remained unfinished at the end of the month. The amount that should be reported in Finished Goods Inventory is:

Accepted Answer

A)  $650,000. 
B)  $135,000. 
C)  $1,816,100. 
D)  $1,587,500. 
E)  $228,600. 
A)  $650,000. 
B)  $135,000. 
C)  $1,816,100. 
D)  $1,587,500. 
E)  $228,600.

Question 17

The following journal entry would be made to record the use of $6,100 of direct labor in a production department during the reporting period:

Accepted Answer

A) True 
 B)False

Question 18

Once equivalent units are calculated for materials, this number will also be used for direct labor and factory overhead.

Accepted Answer

A) True 
 B)False

Question 19

Refer to the following information about the Shaping Department of the Minnesota Factory for the month of August. Minnesota Factory uses the FIFO method of inventory costing.
   The cost per equivalent unit of materials is $10.00, and the cost per equivalent unit of labor and overhead is $22.00. Compute the cost that should be assigned to the beginning units that were completed and transferred during August.

Accepted Answer

The answer of Refer to the following information about the...

Question 20

If a process has ________ or ________ inventory of partially completed production, equivalent units must be calculated so that total costs incurred during the period are assigned to all units worked on.

Accepted Answer

The answer of If a process has ________ or ________...

What is meant by equivalent units of production, and why are they important when a process costing system is used?

In a process costing system, the purchase of raw materials is debited to the Raw Materials Inventory.

Process costing systems are commonly used by companies that produce a large volume of standardized units on a continuous basis.

In process costing, direct labor includes only the labor that is applied directly to individual units of product.

A ________ contains features of both process and job order costing systems.

Wilturner Company incurs $97,000 of labor related directly to the product in the Assembly Department, and $10,000 of labor for services that help production in both the Assembly and Finishing departments. The amount of direct labor and factory overhead respectively are:

A process cost summary is a managerial accounting report that describes all but which of the following:

The following journal entry would be made to record the use of $6,100 of direct labor in a production department during the reporting period:

Once equivalent units are calculated for materials, this number will also be used for direct labor and factory overhead.

If a process has or inventory of partially completed production, equivalent units must be calculated so that total costs incurred during the period are assigned to all units worked on.

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Activity Based Costing and Analysis

Cost Behavior Cost-Volume-Profit Analysis

Variable Costing and Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Reporting Cash Flows

Analysis of Financial Statements

Time Value of Money

Analyzing for Business Transactions

Partnership Accounting

Filters

Exam 3: Process Costing and Analysis

What is meant by equivalent units of production, and why are they important when a process costing system is used?

In a process costing system, the purchase of raw materials is debited to the Raw Materials Inventory.

Process costing systems are commonly used by companies that produce a large volume of standardized units on a continuous basis.

In process costing, direct labor includes only the labor that is applied directly to individual units of product.

A ________ contains features of both process and job order costing systems.

Wilturner Company incurs $97,000 of labor related directly to the product in the Assembly Department, and $10,000 of labor for services that help production in both the Assembly and Finishing departments. The amount of direct labor and factory overhead respectively are:

A process cost summary is a managerial accounting report that describes all but which of the following:

The following journal entry would be made to record the use of $6,100 of direct labor in a production department during the reporting period:

Once equivalent units are calculated for materials, this number will also be used for direct labor and factory overhead.

If a process has ________ or ________ inventory of partially completed production, equivalent units must be calculated so that total costs incurred during the period are assigned to all units worked on.

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Activity Based Costing and Analysis

Cost Behavior Cost-Volume-Profit Analysis

Variable Costing and Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Reporting Cash Flows

Analysis of Financial Statements

Time Value of Money

Analyzing for Business Transactions

Partnership Accounting

Filters

If a process has or inventory of partially completed production, equivalent units must be calculated so that total costs incurred during the period are assigned to all units worked on.