Exam 3: Process Cost Systems

Yield measures the ratio of the materials output quantity to the materials input quantity.

Equivalent units are the sum of direct materials used and direct labor incurred.

Direct materials, direct labor, and factory overhead are assigned to each manufacturing process in a process costing system.

If a department that applies FIFO process costing starts the reporting period with 50,000 physical units that were 25% complete with respect to direct materials and 40% complete with respect to conversion, it must add 12,500 equivalent units of direct materials and 20,000 equivalent units to direct labor to complete them.

Department A had 4,000 units in work in process that were 60% completed as to labor and overhead at the beginning of the period, 29,000 units of direct materials were added during the period, 31,000 units were completed during the period, and 2,000 units were 80% completed as to labor and overhead at the end of the period. All materials are added at the beginning of the process. The first-in, first-out method is used to cost inventories. The number of equivalent units of production for conversion costs for the period was:

The following production data were taken from the records of the Finishing Department for June: Determine the number of equivalent units of production in the June 30 Finishing Department inventory, assuming that the first-in, first-out method is used to cost inventories. Assume the completion percentage of 25% applies to both direct materials and conversion costs.

The inventory at May 1 and the costs charged to Work in Process--Department B during May for Stella Company are as follows:

Tough Hardware purchases raw materials and processes those purchases through a receiving/inspection process prior to stocking for production. Tough places 3 purchase orders for materials for production and receives the goods that day. The first PO is for 2,500 1/2"´ 96" milling blanks at $2.75 each. The second is for 4,000 pieces of 48" ´ 96" ´ 1" sheet steel at $15.55 each. The third PO is for five 55 gallon drums of Milling Lubrication Oil at $475.00 per barrel. The receiving/inspection process is completed and the goods are transferred from Receiving Inventory to Raw Materials. The Receiving/Inspection Department assigns manufacturing overhead of $55.00 per purchase order as well as $2.75 per piece on metal goods and $35.00 per container on fluids. All labor is allocated through overhead. (a) Write the journal entry to purchase and receive these items to Receiving Inventory on account. (b) Assign overhead to the metal goods. (c) Assign overhead to the fluid goods. (d) Transfer all goods to Raw Materials Inventory.

One of the primary uses of a cost of production report is to assist management in controlling production costs.

If 10,000 units which were 40% completed are in process at November 1, 80,000 units were completed during November, and 12,000 were 20% completed at November 30, the number of equivalent units of production for November was 75,600. (Assume no loss of units in production and that inventories are costed by the first-in, first-out method.)

The inventory at June 1 and costs charged to Work in Process - Department 60 during June are as follows:

Process cost systems use job order cost cards to accumulate cost data.

In applying the first-in, first-out method of costing inventories, if 8,000 units which are 30% completed are in process at June 1, 28,000 units are completed during June, and 4,000 units were 80% completed at June 30, the number of equivalent units of production for June was 28,600.

Both job order and process cost accounting use equivalent units of production to determine costs.

Which of the following is not a use of the cost of production report?

In a process costing system, each process will have a work in process inventory account.

Job order manufacturing and process manufacturing are two major costing systems used in manufacturing. Briefly contrast the characteristics of these two systems.

In the manufacture of 15,000 units of a product, direct materials cost incurred was $165,000, direct labor cost incurred was $105,000, and applied factory overhead was $53,500. What is the total conversion cost?

Amos Company's molding department opened on October 1, 2012. During October, 35,000 units were completed and transferred out to the next department. On October 31, 2012, the 9,000 units which remained in inventory were 40% complete with respect to conversion costs and 100% complete with respect to materials. Required: How many equivalent units of work did the molding department complete during October for materials and conversion costs?