Exam 3: Process Cost Systems

Carolwood Company manufactures widgets and uses process costing. The status of their beginning and ending inventory is as follows: Direct materials are added to the manufacturing process in stages. None are added when production begins. Approximately 1/2 of the materials are added when the product is 25% complete. The other half is added when the product is 50% complete. What percentage complete are Beginning Inventory and Ending Inventory with respect to Direct materials(DM) and Conversion Costs(CC)?

Discuss how equivalent units are computed under the average cost method.

The direct materials costs and direct labor costs incurred by a production department are referred to as conversion costs.

When a process cost accounting system records the purchase of materials, the Materials account is credited.

The Mountain Springs Water Company has two departments. Purifying and Bottling. The Bottling Department received 58,000 liters from the Purifying Department. During the period, the Bottling Department completed 56,000 liters, including 4,000 liters of work in process at the beginning of the period. The ending work in process was 6,000 liters. How many liters were started and completed during the period?

Information for the Sandy Manufacturing Company for the month of July 2012 is as follows:

If the products of a manufacturing process are produced to customer specifications, a process cost system is more appropriate than a job order cost system.

The FIFO method of process costing is simpler than the Average cost method.

If the principal products of a manufacturing process are identical, a process cost system is more appropriate than a job order cost system.

Department G had 3,600 units, 25% completed at the beginning of the period, 11,000 units were completed during the period, 3,000 units were one-fifth completed at the end of the period, and the following manufacturing costs were debited to the departmental work in process account during the period: Assuming that all direct materials are placed in process at the beginning of production and that the first-in, first-out method of inventory costing is used, what is the total cost of the units "started and completed" during the period (round unit cost calculations to four decimal places)?

Mocha Company manufactures a single product by a continuous process, involving three production departments. The records indicate that direct materials, direct labor, and applied factory overhead for Department 1 were $100,000, $125,000, and $150,000, respectively. The records further indicate that direct materials, direct labor, and applied factory overhead for Department 2 were $55,000, $65,000, and $80,000, respectively. In addition, work in process at the beginning of the period for Department 1 totaled $75,000, and work in process at the end of the period totaled $60,000. The journal entry to record the flow of costs from Department 1 into Department 2 during the period is:

In a process cost system, the amount of work in process inventory is valued by:

The inventory at April 1, 2012, and the costs charged to Work in Process--Department B during April for Hawk Company are as follows:

Custom-made goods would be accounted for using a process costing system.

The last step in the accounting procedure for process costing is the calculation of equivalent units of production.

Which of the following costs incurred by a paper manufacturer would NOT be included in the group of costs referred to as conversion costs?

The cost of production report reports the cost charged to production and the costs allocated to finished goods and work in process.

The amount journalized showing the cost added to finished goods is taken from the cost of production report.

Mocha Company manufactures a single product by a continuous process, involving three production departments. The records indicate that direct materials, direct labor, and applied factory overhead for Department 1 were $100,000, $125,000, and $150,000, respectively. The records further indicate that direct materials, direct labor, and applied factory overhead for Department 2 were $55,000, $65,000, and $80,000, respectively. In addition, work in process at the beginning of the period for Department 1 totaled $75,000, and work in process at the end of the period totaled $60,000. The journal entry to record the flow of costs into Department 1 during the period for direct labor is:

The direct labor costs and factory overhead costs incurred by a production department are referred to as conversion costs.