Exam 21: Costing Systems Process Costing

Which of the following items most likely would be manufactured using a process costing system?

The cost of producing each gallon of paint differs.

It is difficult to track costs to individual products in a continuous flow manufacturing process.

Fantastic Fabricating uses the FIFO method in its process costing system. Beginning inventory in the mixing processing center consisted of 4,000 units, 75 percent complete with respect to conversion costs. Ending work in process inventory consisted of 3,000 units, 60 percent complete with respect to conversion costs. If 11,200 units were transferred to the next processing center during the period, the equivalent units for conversion costs would be

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 average costing method. The following data are available for one of its accounting periods: Equivalent units for direct materials are

Use the following information to perform the calculations requested below, assuming that the average costing approach to a process costing system is being used. Beginning work in process inventory: 16,000 units, 100 percent complete as to direct materials, 85 percent complete as to conversion costs Ending work in process inventory: 36,000 units, 100 percent complete as to direct materials, 70 percent complete as to conversion costs Units started during the month: 59,000 a. Calculate units to be accounted for during the month. b. Calculate units completed and transferred out during the month. c. Calculate equivalent units for direct materials. d. Calculate equivalent units for conversion costs.

One reason for preparing a process cost report for a particular department is to determine the amount of costs to transfer to the next department or to the Finished Goods Inventory account at the end of the period.

Jackson Electronics, Inc., manufactures a variety of microelectronic component parts and utilizes a process costing system. The following information was provided by the accounting department as of July 31, 2010: a. Units started during the month of July totaled 118,200. b. Units partially complete as of July 31 equaled 7,400. c. Ending work in process inventory as of July 31, 2010, was 70 percent complete. d. Direct materials are added at the beginning of the process, and conversion costs are incurred uniformly throughout the process. e. Units in process on July 1, 2010 - 8,200 units. Using the information provided, compute the equivalent units of production for direct materials and conversion costs for July using the average costing method.

In a process costing system, percentage-of-completion factors normally are obtained from

Jackson Electronics, Inc., manufactures a variety of microelectronic component parts and utilizes a process costing system. The following information was provided by the accounting department as of July 31, 2010: a. Units started during the month of July totaled 118,200. b. Units partially complete as of July 31 equaled 7,400. c. Ending work in process inventory as of July 31, 2010, was 70 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 July 1, 2010. Using the information provided, compute the equivalent units of production for direct materials and conversion costs for July using the FIFO costing method.

Information for the current month for the Polishing Department is shown below. Direct materials are added at the beginning of the process. Beginning work in process is 30 percent complete as to conversion costs; ending work in process inventory is 80 percent complete. Determine the cost of ending work in process inventory.

Unlike a job order costing system, a process costing system is not restricted to one Work in Process Inventory account.

During March, Department A started 300,000 units of product in a particular production process. The beginning work in process inventory was 50,000 units, and the ending inventory was 40,000 units. Direct materials are introduced at the start of processing, and beginning and ending inventories are considered to be 40 percent complete with respect to conversion costs. Department A uses the FIFO costing method. The number of units started and completed during March was

During October, Department A started 320,000 units of product in a particular manufacturing process. The beginning work in process inventory was 50,000 units, and the ending inventory was 30,000 units. Direct materials are introduced at the start of processing, and beginning and ending inventories are considered to be 50 percent complete with respect to conversion costs. Department A uses the FIFO costing method. The number of units started and completed during October was

The equivalent units of production must be computed before the value of ending inventory can be determined in a process costing system.

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 Equivalent units for direct materials are

When the FIFO cost flow assumption is used, the equivalent units will always equal the actual units in beginning work in process inventory, plus the actual units started and completed during the current period plus the percent of ending work in process inventory completed during the current period.

Because process costing is normally associated with a continuous production flow, products that are in process at the beginning of the period are assumed to be the first products completed during the current period.

The types of computations for costs to be transferred out of Work in Process Inventory differ if the production process involves multiple departments rather than a single department.

The following data were taken from the accounting records of a company that uses the FIFO method in its process costing system: Beginning work in process inventory: 20,000 units (materials 100% complete, conversion costs 60% complete) Started in process during the period: 80,000 units Ending work in process inventory: 30,000 units (materials 100% complete, conversion costs 70% complete) The equivalent units are