Exam 17: Process Costing

Answer the following questions using the information below: Jane Industries manufactures plastic toys. During October, Jane's Fabrication Department started work on 10,000 models. During the month, the company completed 11,000 models, and transferred them to the Distribution Department. The company ended the month with 1,500 models in ending inventory. There were 2,500 models in beginning inventory. All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process. The FIFO method of process costing is being followed. Beginning work in process was 25% complete as to conversion costs, while ending work in process was 50% complete as to conversion costs. Beginning inventory: Direct materials costs $\quad \$ 19,200$ Conversion costs $\quad \quad \$ 10,800$ Manufacturing costs added auring the œcounting period: Direct materials costs $\quad \$ 70,000$ Conversion costs $\quad \quad \$ 240,000$ -What is the cost assigned to ending inventory during October?

Sodius Chemical Inc.placed 220,000 liters of direct materials into the mixing process.At the end of the month,5,000 liters were still in process,30% converted as to labor and factory overhead.All direct materials are placed in mixing at the beginning of the process and conversion costs occur evenly during the process.Sodius uses weighted-average costing. Required: a.Determine the equivalent units in process for direct materials and conversion costs,assuming there was no beginning inventory. b.Determine the equivalent units in process for direct materials and conversion costs,assuming that 12,000 liters of chemicals were 40% complete prior to the addition of the 220,000 liters.

An assumption of the FIFO process-costing method is that ________.

Which of the following statements best describes conversion costs?

In the computation of the cost per equivalent unit,the weighted-average method of process costing considers all the costs ________.

Pet Products Company uses an automated process to manufacture its pet replica products.For June,the company had the following activities: Beginning work in process inventory 4,500 items, 1/4 complete Units placed in production 15,000 units Units completed 17,500 units Ending work in process inventory 2,000 items, 3/4 complete Cost of beginning work in process \ 5,250 Direct material costs, current \ 16,500 Conversion costs, current \ 23,945 Direct materials are placed into production at the beginning of the process and conversion costs are incurred evenly throughout the process. Required: Prepare a production cost worksheet using the FIFO method.

Which of the following statements is true of process costing?

Why do we need to accumulate and calculate unit costs in process costing (and also job costing)?

Describe the differences between process costing and job costing.Discuss some typical products which would be more likely to use process costing as compared to some which would be more likely to use job costing.

Answer the following questions using the information below: Stefan Ceramics is in the business of selling ceramic vases. It has two departments - molding and finishing. Molding department purchases tungsten carbide and produces ceramic vases out of it. Ceramic Vases are then transferred to finishing department, which designs it as per the requirement of the customers. During the month of July, molding department purchased 500 kgs of tungsten carbide at $60 per kg. It started manufacture of 4,000 vases and completed and transferred 3,200 vases during the month. It has 800 vases in the process at the end of the month. It incurred direct labor charges of $1,000 and other manufacturing costs of $500, which included electricity costs of $200. Stefan had no inventory of tungsten carbide at the end of the month. It also had no beginning inventory of vases. The ending inventory was 50% complete in respect of conversion costs. -The journal entry to record tungsten carbide purchased and used in production during July is ________.

Which of the following entries is used to record the standard costs of direct materials assigned to units worked on and total direct materials variances?

Answer the following questions using the information below: Shiffon Electronics manufactures music player. Its costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department, the Programming department, and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Shiffon Electronics uses weighted-average costing. The following information is available for the month of March 2015 for the Assembly department. Work in process, beginning inventory 300 units Conversion costs ( 30\% complete) Units started during April 800 units Work in process, ending inventory: 100 units Conversion costs ( 50\% complete) The cost details for the month of March are as follows: Work in process, beginuing inventory: Direct materials \ 345,000 Conversion costs \ 360,000 Direct materials costs added during April \ 700,000 Conversion costs added during April \ 1,120,000 -What are the equivalent units for direct materials and conversion costs,respectively,for March?

When there are multiple support departments within an organization,it is common to use journal entries to transfer-in costs from one department to another.What are some of the points to remember about these costs?

If two different direct materials-such as the circuit board and microphone-are added to the process at different times,a company will need two different direct-materials categories to assign direct materials cost.

Which of the following best describes transferred-in costs in process costing?

Shining Star Company uses an automated process to clean and polish its souvenir items.For March,the company had the following activities: Beginning work in process inventory 3,000 items, 1/3 complete Units placed in production 12,000 units Units completed 9,000 units Ending work in process inventory 6,000 items, 2/5 complete Cost of beginning work in process \ 2,500 Direct material costs, current \ 9,000 Conversion costs, current \ 8,320 Direct materials are placed into production at the beginning of the process and conversion costs are incurred evenly throughout the process. Required: Prepare a production cost worksheet using the FIFO method.

If there was no beginning work in process and no ending work in process under the weighted-average process costing method,the number of equivalent units for direct materials,if direct materials were added at the start of the process,would be ________.

Answer the following questions using the information below: Shiffon Electronics manufactures music player. Its costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department, the Programming department, and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Shiffon Electronics uses weighted-average costing. The following information is available for the month of March 2015 for the Assembly department. Work in process, beginning inventory 300 units Conversion costs ( 30\% complete) Units started during April 800 units Work in process, ending inventory: 100 units Conversion costs ( 50\% complete) The cost details for the month of March are as follows: Work in process, beginuing inventory: Direct materials \ 345,000 Conversion costs \ 360,000 Direct materials costs added during April \ 700,000 Conversion costs added during April \ 1,120,000 -What is the conversion cost per equivalent unit in March?

In a process-costing system when goods move from department to department,the accounting for such transfers is relatively simple under ________.

High Universal Industries operates a division in Brazil,a country with very high inflation rates.Traditionally,the company has used the same costing techniques in all countries to facilitate reporting to corporate headquarters.However,the financial accounting reports from Brazil never seem to match the actual unit results of the division.Management has studied the problem and it appears that beginning inventories may be the cause of the unmatched information.The reason for this is that the inventories have a different financial base because of the severe inflation. Required: How can process costing assist in addressing the problem facing Universal Industries?