Exam 16: Process Costing and Analysis

A company's January 1 Work in Process inventory contained 30,000 units that were 25% complete with respect to direct labor.The beginning inventory was completed this year and another 120,000 units were started.Of those started,80,000 were finished and the remaining 40,000 were 30% complete.Calculate the equivalent units of production for the year using the FIFO method.

The second step in accounting for production activity in a period,after determining the physical flow of units,is to compute ________.

Process costing systems consider overhead costs to include those costs that cannot be tied to individual processes.

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.

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.The ending Work in Process inventory consists of 36,000 equivalent units of direct materials and 36,000 equivalent units of conversion costs.The amount that should be reported in ending Work in Process Inventory is:

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

Pitt Enterprises manufactures jeans.All materials are introduced at the beginning of the manufacturing process in the Cutting Department.Conversion costs are incurred uniformly throughout the manufacturing process.As the cutting of material is completed,the pieces are immediately transferred to the Sewing Department.Information for the Cutting Department for the month of May follows. Work in Process,May 1 (50,000 units,100% complete for direct materials,40% complete with respect to conversion costs; includes $70,500 of direct material cost; $34,050 of conversion costs). Work in Process,May 31 (75,000 units,100% complete for direct materials; 20% complete for conversion costs). If Pitt Enterprises uses the FIFO method of process costing. -Compute the cost per equivalent unit for direct materials and conversion costs respectively for May.

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

On a process cost summary,the total costs to account for (the processing costs for the period plus the Work in Process at the end of the period)should equal ________ (________ plus ________).

A production department's output for the most recent month consisted of 8,000 units completed and transferred to the next stage of production and 5,000 units in ending Work in Process inventory.The units in ending Work in Process inventory were 50% complete with respect to both direct materials and conversion costs.Calculate the equivalent units of production for the month,assuming the company uses the weighted average method.

Process operations,also called process manufacturing or process production,is the ________ production of similar products in a ________ flow of sequential steps.

Process costing is applied to operations with customized products.

A company uses a process costing system and the weighted average method for inventory costs.The following information is available regarding direct labor for the current year: (a)Calculate the equivalent units of production for direct labor for the year. (b)Calculate the cost per equivalent unit for direct labor (round to the nearest cent).

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

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 all units that were completed and transferred during August.

The following table of cost information is available for the Renaldo Company for the month of November: Based on the table of cost information above,prepare the general journal entry required to record the: a.Transfer of goods from the molding department to the finished goods inventory. b.Cost of goods sold for November.

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

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:

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

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.