Exam 3: Process Costing and Analysis

A company uses the FIFO 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.

Sparky Corporation uses the weighted-average 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.

Why is the Process Cost Summary important to management and how does the Process Cost Summary accomplish its purposes?

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

When the final production department completes goods, the cost of the completed goods are transferred to ________.

Equivalent units of production for direct materials and direct labor are always the same.

The FIFO method of computing equivalent units includes the beginning inventory costs in computing the cost per equivalent unit for the current period.

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

The number of equivalent units of production assigned to ending Work in Process inventory should be equal to or less than the number of physical units in ending Work in Process inventory.

The process cost summary presents calculations of the cost of units completed during the reporting period, but does not present any information about the ending Work in Process inventory.

A unique feature of process costing systems is the use of a single Work in Process Inventory account regardless of the number of production departments that exist.

Process and job order manufacturing operations both combine materials, labor, and overhead items in the process of producing products.

A company that applies process costing is most frequently characterized by:

Using conversion cost per equivalent unit is appropriate for many businesses that use process costing because:

Process costing typically uses only one Work in Process Inventory account, while job order costing typically uses a separate Work in Process Inventory account for each department.

When direct labor and overhead enter the production process at different rates, it is appropriate to use a conversion cost per equivalent unit.

Which of the following characteristics applies to process costing but not to job order cost accounting?

Equivalent units of production are equal to:

Dazzle, Inc. produces beads for jewelry making use. The following information summarizes production operations and sales activities for June. The journal entry to record June sales is:

If Grayson Manufacturing incurred $17,400 for direct labor in the assembly department and $10,300 for direct labor in the painting department, the journal entry to record the labor used is: