Exam 4: Process Costing and Hybrid Product-Costing Systems

Southern Lake Chemical manufactures a product called Zubek. Direct materials are added at the beginning of the process, and conversion activity occurs uniformly throughout production. The beginning work-in-process inventory is 60% complete with respect to conversion; the ending work-in-process inventory is 20% complete. The following data pertain to May: Units Work in process, May 1 15,000 Units started during May 60,000 Units completed and transferred out 68,000 Work in process, May 31 7,000 Direct Conversion Total Materials Costs Work in process, May 1 \ 41,250 \ 16,500 \ 24,750 Costs incurred during May Totals Using the weighted-average method of process costing, the equivalent units of direct materials total:

Kendra Corporation uses a process-cost accounting system. The company adds direct materials and direct labor at the start of its production process; overhead cost is incurred evenly throughout manufacturing. The firm has no beginning work-in-process inventory; its ending work in process is 40% complete. Which of the following sets of percentages would be used to calculate the correct number of equivalent units in the ending work-in-process inventory?

Southern Lake Chemical manufactures a product called Zubek. Direct materials are added at the beginning of the process, and conversion activity occurs uniformly throughout production. The beginning work-in-process inventory is 60% complete with respect to conversion; the ending work-in-process inventory is 20% complete. The following data pertain to May: Units Work in process, May 1 15,000 Units started during May 60,000 Units completed and transferred out 68,000 Work in process, May 31 7,000 Direct Conversion Total Materials Costs Work in process, May 1 \ 41,250 \ 16,500 \ 24,750 Costs incurred during May Totals Using the weighted-average method of process costing, the total costs remaining in work in process on May 31 are:

The flow of costs through the manufacturing accounts is essentially the same in both process costing and job-order costing.

Companies that use a process-cost accounting system would establish a separate Work-in-Process Inventory account for each manufacturing department.

Companies that use a process-cost accounting system would:

Hammett has a single production department, and uses a process-costing system. The balance in its Work-in-Process account on January 1 was $68,000. The account was charged with direct materials, direct labor, and manufacturing overhead of $450,000 throughout the year. If a review of the accounting records determined that $86,000 of goods were still in production at year-end, Hammett should make a journal entry on December 31 that includes:

In a process-costing system, manufacturing costs are accumulated by:

Universal Manufacturing uses a weighted-average process-costing system. All materials are introduced at the start of manufacturing, and conversion costs are incurred evenly throughout the process. The company's beginning and ending work-in-process inventories totaled 10,000 units and 15,000 units, respectively, with the latter units being 2/3 complete at the end of the period. Universal started 30,000 units into production and completed 25,000 units. Manufacturing costs follow. Beginning work in process: Materials, $60,000; conversion cost, $150,000 Current costs: Materials, $180,000; conversion cost, $480,000 Universal's equivalent-unit cost for materials is:

Which of the following manufacturers would most likely not use a process-cost accounting system?

Orville Knitters manufactures sweaters and uses an operation-costing system. All sweaters are processed through Department no. 1, with subsequent processing taking place in Department no. 2 or Department no. 3 depending on the type of fabric used. Twenty thousand sweaters were produced during the year; there was no beginning or ending work in process. Sixty percent of the goods were sent to Department no. 2 for manufacturing. Conversion cost incurred in the three departments totaled $504,000, subdivided as follows: Department no. 1, $360,000; Department no. 2, $60,000; and Department no. 3, $84,000. Data pertaining to two representative orders, nos. 545 and 567, were: No. 545 No. 567 Direct materials \ 112,000 \ 94,000 Number of sweaters 800 1,300 Subsequent processing department No. 3 No. 2 Required: A. Explain the nature of operation costing. B. Determine the cost of order nos. 545 and 567.

When computing the conversion cost per equivalent unit under the weighted-average method of process costing, all of the following information would be needed except:

Cosby uses a weighted-average process-costing system. All materials are added at the beginning of the process; conversion costs are incurred evenly throughout production. The company finished 40,000 units during the period and had 15,000 units in progress at year-end, the latter at the 40% stage of completion. Total material costs amounted to $220,000; conversion costs were $414,000. The cost of the ending work in process is:

Willingham uses a process-costing system for its single product, which is manufactured from Material X and Material Y. X and Y are introduced to the product as follows: Material X: Added at the beginning of manufacturing Material Y: Added at the 75% stage of completion The company started and completed 40,000 units during the period, and had an ending work-in-process inventory amounting to 8,000 units, 20% complete. Which of the following choices correctly expresses the total equivalent units of production for Material X and Material Y?

Which of the following statements about operation costing is(are) true? I. Conversion costs are accumulated by department. II. Direct material costs are accumulated by batch. III. Operation costing is a hybrid product-costing system.

Manhattan, Inc., uses a weighted-average process-costing system. All materials are introduced at the beginning of production; conversion cost is incurred evenly throughout manufacturing. The following information pertains to April: The company's accountant has already computed the cost per equivalent unit, as follows: materials, $5; conversion, $14. Required: Calculate the cost of goods completed during April and the cost of the ending work-in-process inventory.

Gregory, which uses a process-costing system, adds all material at the beginning of production and incurs conversion cost evenly throughout manufacturing. The information that follows relates to the period just ended: Units started and completed: 75,000 Units in ending work-in-process inventory: 15,000, 60% complete Which of the following choices correctly expresses the total equivalent units of production with respect to material and conversion cost? Material Conversion A. 75,000 75,000 B. 84,000 84,000 C. 90,000 81,000 D. 90,000 84,000 E. 90,000 90,000

Majesco, which uses a process-costing system, adds material at the beginning of production and incurs conversion cost evenly throughout manufacturing. The following selected information was taken from the company's accounting records: Total equivalent units of materials: 5,000 Total equivalent units of conversion: 4,400 Units started and completed during the period: 3,500 On the basis of this information, the ending work-in-process inventory's stage of completion is:

Haskins Textile Co. manufactures a variety of fabrics. All materials are introduced at the beginning of production; conversion cost is incurred evenly through manufacturing. The Weaving Department had 2,000 units of work in process on April 1 that were 30% complete as to conversion costs. During April, 9,000 units were completed and on April 30, 4,000 units remained in production, 40% complete with respect to conversion costs. The equivalent units of direct materials for April total:

Barrett Corporation had 6,500 units of work in process on April 1. During April, 19,100 units were completed and as of April 30, 5,100 units remained in production. How many units were started during April?