Exam 4: How Is Process Costing Used to Track Production Costs

Diaz Company uses process costing in its two processing departments; Assembly and Finishing.If the Assembly Department requisitioned direct materials to be used in production,totaling $80,000,which one of the following journal entries would be made to record this transaction? a. WIP Inventory - Assembly 80,000 WIP Inventory - Materials 80,000 b. Raw Materials Inventory 80,000 WIP Inventory - Assembly 80,000 c. WIP Inventory - Assembly 80,000 Raw Materials Inventory 80,000 d. Cost of Goods sold 80,000 Finished Goods Inventory 80,000 e. $\text { None of the answer choices is correct. }$

Exhibit 4-1 Silva Coporation uses the weighted average process costing method.The Mixing Department at Silva had 17,000 units in beginning inventory.These units contained $70,000 in direct materials,$80,000 in direct labor,and $60,000 in overhead.During the period,the department incurred costs of $320,000 in direct materials,$400,000 in direct labor and $200,000 in overhead and started 80,000 units.Ending inventory consisted of 6,000 units which were 100% complete with respect to direct materials and 50% complete with respect to direct labor and overhead. -Refer to Exhibit 4-1.What is the total cost of units transferred out?

Equivalent units are usually applied to:

For a manufacturing company using process costing,cost per equivalent unit is only calculated for direct labor and direct materials.

Diaz Company uses process costing in its two processing departments Assembly and Finishing.If the Assembly Department completes a batch of products with production costs of $30,000 and moves it to the Finishing Department,which one of the following journal entries would be made to record this transaction? a. WIP Inventory - Finishing 30,000 WIP Inventory - Assembly 30,000 b. WIP Inventory - Assembly 30,000 WIP Inventory - Finishing 30,000 c. Finished Goods Inventory 30,000 WIP Inventory - Assembly 30,000 d. WIP Inventory - Assembly 30,000 Cost of Goods Sold 30,000 e. $\text {None of the answer choices is correct.}$

In a process costing system,the first step is to summarize the physical flow of units so that Units to be accounted for equals Units sold.

A process costing system is used by companies that produce similar or identical units of product.

The production cost report does all the following except:

Which of the following statements is true regarding cost per equivalent unit?

Exhibit 4-2 Chem Company makes chemicals and uses the weighted average process costing method.The company has two processing departments - Mixing and Packaging.They had no beginning inventories for April and the percentages of completion were 50% for direct materials,direct labor,and overhead. Gallons of chemical completed during April 90,000 90,000 Gallons of chemical on hand at April 30 (50\% complete) 8,000 0 Production costs incurred \ 47,000 \ 153,000 -Refer to Exhibit 4-2.What is the amount of ending WIP Inventory in the Mixing Department?

Diaz Company uses process costing in its two processing departments Assembly and Finishing.If the Finishing Department is the final production department and completes product with a production cost of $15,000,which one of the following journal entries would be made to record this transaction? a. Cost of Goods Sold 15,000 WIP Inventory - Finishing 15,000 b. Finished Goods Inventory 15,000 Cost of Goods Sold 15,000 c. WIP Inventory - Finishing 15,000 Finished Goods Inventory 15,000 d. Finished Goods Inventory 15,000 WIP Inventory - Finishing 15,000 e. $\text {None of the answer choices is correct.}$

Process costing is typically used by service companies that have one department.

The number of equivalent units for any input (direct materials,direct labor,or overhead)cannot be greater than:

The unit cost information for process costing comes from the departmental production cost report.

Using a process costing system,the journal entry to record the use of direct labor in the Finishing Department includes:

When units are transferred from one production process to another,the journal entry will include a debit and a credit to two different Work-in-Process Inventory accounts.

Everlast Inc.had 12,000 units in WIP Inventory at December 1 that were 70% complete with respect to direct labor and overhead.During December,40,000 units were completed.On December 31,the 14,000 units in WIP Inventory were 30% complete as to direct labor and overhead.Direct materials are added at the beginning of the process.How many units were started during December?

Use the following information to calculate the cost per equivalent unit for direct materials,direct labor,overhead,and in total for the Assembly Department of Dessert Company for the month of June. Direct Direct Materials Labor Overhead Total costs to be accounted for \ 600,000 \ 1,200,000 \ 1,800,000 Total equivalent units accounted for 30,000 units 24,000 units 24,000 units