Exam 5: Process Costing and Operation Costing

Describe the weighted average method used in process costing and explain how the unit costs are calculated.

The major difference between weighted average and FIFO is

The departmental production report summarises the flow of production quantities through the department plus the amount of production costs transferred in from the department's work in process inventory account during the period.

The technical term for costs moving between one department and the next in a multidepartment process is

The departmental production report replaces the job cost sheet used by production departments.

Raphael's Refining uses a weighted average process costing system. For a particular period, its opening inventory consisted of 100 items (60 per cent complete as to conversion costs) whose costs were $1600 made up of material $300 and conversion cost $1300. During the month, 1000 items were started and 950 were completed. Ending inventory of WIP was one-third complete. There was no spoilage. Costs placed in process during the month were materials $1600 and conversion costs $13 700. Materials are added at the halfway point. What is the amount of cost that would be allocated to goods completed in the period?

Which of the following inventory valuation method/s is/are less suited to cost control?

Given the following information, use the weighted average method to calculate cost per equivalent unit for the following materials.

In both job and process costing, the journal entry to record cost of goods sold is.

Management uses predetermined overhead costs when costs and cost drivers are

South River Chemicals Pty Ltd manufactures a product called Zybek. Direct materials are added at the end of the process and conversion activity occurs uniformly throughout the process. The following data pertain to the month of May. Using the FIFO method of process costing, calculate the equivalent units of direct materials and conversion activity for the month of May.

Where a process has two departments [A and B], the first new debit entry in the work in process inventory account for Department B in any period will be transferred-in costs.

Operation costing is appropriate for products with the following characteristics. i. Repetitive mass production ii. Individual products iii. Large batches with repetitive processes iv. Some unique features, some common features

Equivalent unit calculations are necessary to allocate manufacturing costs between:

In a process costing system the cost of abnormal spoilage should be:

Eldervale Winery produces premium wine in the Hunter Valley. Jasmine Droll, the vineyard manager who is responsible for overseeing the grape harvest, ignores company guidelines and decides to hire some inexperienced harvest workers. As a result a lot of good grapes are wasted. For the purpose of product costing, the losses associated with this grape wastage should be treated as

Costs are accumulated by a responsibility centre for control purposes when using:

The establishment of predetermined conversion costs for operation costing requires which of the following. i. Budgeted level of the cost driver ii. Budgeted direct labour costs iii. Budgeted manufacturing overhead costs

In process costing, equivalent units are the same under both the weighted average method and the FIFO method.

Process costing systems are suitable for firms that produce i. homogeneous products. ii. heterogeneous products. iii. individual products. iv. repetitive products.