Exam 16: Process Costing and Analysis

If a department that applies process costing starts the reporting period with 40,000 physical units that were 80% complete with respect to direct materials and 50% complete with respect to direct labor,it must add 8,000 equivalent units of direct materials and 20,000 equivalent units of direct labor to complete them.

To compute equivalent units of production,one must be able to reasonably estimate:

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. -Prepare a cost reconciliation for the month of August.

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.

Refer to the following information about the Finishing Department in the Davidson Factory for the month of June.Davidson Factory uses the FIFO method of inventory costing. -Compute equivalent units for direct materials,direct labor and overhead for June.

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.

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

If Department R uses $60,000 of direct materials and Department S uses $15,000 of direct materials,the following journal entry would be recorded by the process costing system:

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.

The combined costs of direct labor and factory overhead per equivalent unit used by many businesses with process operations is called:

Wilturner Company incurs $82,000 of labor related directly to the product in the Assembly Department,$31,000 of labor related to the Assembly Department as a whole,and $18,000 of labor for services that help production in both the Assembly and Finishing departments.The journal entries to record the labor for the Assembly Department would include:

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

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.

If the predetermined overhead allocation rate is 250% of direct labor cost and the Finishing Department's direct labor cost for the reporting period is $20,000,the following entry would record the allocation of overhead to the products processed in this department:

In the same time period,it is possible that a production department can produce 1,000 equivalent finished units with respect to direct materials and 800 equivalent finished units with respect to direct labor.

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

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.

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.

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.