Exam 21: Costing Systems Process Costing

Nader, Inc., has the following information available: At the beginning of the period, there were 500 units in process that were 40 percent complete as to conversion costs and 100 percent complete as to direct materials costs. During the current period, 4,300 units were started and completed. Ending inventory contained 320 units that were 80 percent complete as to conversion costs and 100 percent complete as to direct materials costs. (Assume that the company uses the FIFO costing method.) The total costs that will be transferred into the Finished Goods Inventory account during the current period are

Process costing is a system of

Why are equivalent units of production used in process costing?

Use the following data from a company using a process costing system to answer the question(s) below. The FIFO process costing method is used by the company. Equivalent units for conversion costs during the month totaled

One of the steps in preparing the process cost report requires dividing current costs charged to the Work in Process Inventory account of each department or production process by equivalent units to calculate the cost per equivalent unit.

he Bakersfield Company has the following information available: At the beginning of the period, there were 800 units in process that were 60 percent complete as to conversion costs and 100 percent complete as to direct materials costs. During the current period, 5,800 units were started and completed. Ending inventory contained 400 units that were 60 percent complete as to conversion costs and 100 percent complete as to direct materials costs. (Assume that the company uses the FIFO process costing method.) The total costs that will be transferred into the Finished Goods Inventory account during the current period are

When the FIFO costing method is used in process costing, the number of units in beginning inventory is multiplied by 100 percent to determine the equivalent units.

The amount of equivalent production units for direct materials is always the same as that for conversion costs.

A company should use process costing rather than job order costing if

The Taylor Company uses a process costing system. Assume that direct materials are added at the beginning of the period and that direct labor and overhead are added continuously throughout the process. The company uses the FIFO costing method. The following data are available for one of its accounting periods Assume that you have calculated a direct materials cost per unit of $4 and a conversion cost per unit of $7. Under this assumption, the ending balance for Work in Process Inventory would be

If a company uses a process costing system to account for costs in its four production departments, how many Work in Process accounts will it use?

Trunkey Products, Inc., uses a process costing system and has just completed production for the month of November 20xx. The following production data were obtained from the accounting records: a. Units in beginning inventory totaled 6,800 and were 30 percent complete as of November 1 (all direct materials were added to these products in the preceding month). b. During the period, 156,200 units were started. c. 19,200 units were partially completed as of November 30, 20xx. d. Ending work in process inventory was 40 percent complete at month end. From the data given, compute the equivalent units of production for direct materials and conversion costs for the month ended November 30, 20xx, assuming the company follows average costing method.

Production has just been completed for January 20xx by Colombo, Inc. The company utilizes a process costing system, and the following accounting and operating information was obtained from company records: a. Beginning work in process inventory consisted of units totaling 8,200 that were 60 percent complete as of January 1, 20xx (all direct materials were added to the units at the beginning of the production process that took place in the preceding month). b. 260,000 units were started during January. c. At the end of the month, 22,400 units were in work in process inventory and were 100 percent complete with respect to direct materials and 40 percent complete with respect to conversion costs. From the figures shown above, and assuming a FIFO costing flow, prepare in good form a schedule of equivalent production for the month ended January 31, 20xx.

Data for Osaka Corporation for the month of June 20xx are as follows: Assume the company uses average costing method. Prepare a process cost report for June.

Trunkey Products, Inc., uses a process costing system and has just completed production for the month of November 20xx. The following production data were obtained from the accounting records: a. Units in beginning inventory totaled 6,800 and were 30 percent complete as of November 1 (all direct materials were added to these products in the preceding month). b. During the period, 156,200 units were started. c. 19,200 units were partially completed as of November 30, 20xx. d. Ending work in process inventory was 40 percent complete at month end. From the data given, compute the equivalent units of production for direct materials and conversion costs for the month ended November 30, 20xx, assuming a FIFO flow of costs.

The reason for combining direct labor and overhead costs together and calling them "conversion costs" is that

Montell Inc. produces a variety of outdoor equipment products and utilizes a process costing system. The following information was provided by the accounting department as of March 31, 20xx: a. Units started during the month of March totaled 314,000. b. Units partially complete as of March 31 equaled 76,000. c. Ending work in process inventory as of March 31, 20xx, was 80 percent complete. d. Direct materials are added at the beginning of the process, and conversion costs are incurred uniformly throughout the process. e. No units were in process on March 1, 20xx. Using the information provided, compute the equivalent units of production for direct materials and conversion costs for the month ended March 31, 20xx, assuming a FIFO costing flow.

The FIFO approach to process costing assumes that items in beginning inventory were started and completed in the current period.

Use the following data from a company using a process costing system to answer the question below. The company uses average process costing method. Units completed and transferred out of the department during the month totaled

Weston Company uses the FIFO method in its process costing system. The first processing department, the Welding Department, started the month with 18,000 units in its beginning work in process inventory that were 50 percent complete with respect to conversion costs. The conversion costs in the beginning work in process inventory were $52,200. An additional 55,000 units were started into production during the month. There were 16,000 units in the ending work in process inventory of the Welding Department that were 20 percent complete with respect to conversion costs. A total of $284,160 in conversion costs were incurred in the department during the month. What would be the cost per equivalent unit for conversion costs for the month on the department's process cost report? (Round to three decimal places.)