Deck 17: Process Costing

Question 1

The first step in process costing is to calculate cost per equivalent unit.

Answer 1

False

Question 2

What is meant by the term "prime cost pool"?

Answer 2

A prime cost is a direct cost. In most process costing operations, labour is not treated as a direct cost, but rather as an indirect cost and is grouped with overhead as part of conversion costs. Therefore, a prime cost pool in process costing is normally the direct materials cost pool.

Question 3

Discuss some typical products which would likely use process costing.

Answer 3

In a process-costing system, the units produced as output are very similar to one another. As a result, the means by which the raw material is converted to a finished product is common among all of the products. This allows the conversion costs to be summed up and divided by the total number of units for an accurate conversion cost on a unit by unit basis. Some typical types of products which are likely to use process costing are oil refineries, ice cream, various food preparation industries, etc. This is because the raw material is processed in a similar manner for all of the units produced.

Question 4

Equivalent units measure output in terms of the physical quantities of each of the inputs (factors of production) that have been consumed by the units.

Question 5

Use the information below to answer the following question(s).
Plastic Molding, Inc.'s costing system utilizes two cost categories; direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of production. Conversion costs are allocated evenly throughout production. Data for the Assembly Department for March are:

What is the unit cost for February in the Assembly Department?

A) $1,000
B) $1,750
C) $3,500
D) $3,750
E) $3,900

Question 6

Operating personnel must be able to estimate the percentage of work-in-process completed in process costing.

Question 7

Process-costing systems separate costs into cost categories according to the timing of when costs are introduced into the process.

Question 8

Process costing is extremely useful when there are a variety of products produced, as compared to the production of a single product.

Question 9

Which of the following is False concerning equivalent units?

A) Equivalent units are calculated separately for each cost category.
B) Equivalent units are equal to physical units.
C) Equivalent units measure output in terms of the physical quantities of the inputs consumed.
D) Equivalent units are necessary when process costing is used.
E) The number of equivalent units may be identical for direct materials and for conversion costs.

Question 10

The primary difference between job costing and process costing is the extent of averaging used to compute unit costs of products or services.

Question 11

Use the information below to answer the following question(s).
Plastic Molding, Inc.'s costing system utilizes two cost categories; direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of production. Conversion costs are allocated evenly throughout production. Data for the Assembly Department for March are:

How many units were completed and transferred out of the Assembly Department during March?

A) 200 units
B) 1,200 units
C) 1,400 units
D) 1,600 units
E) 1,720 units

Question 12

Examples of industries that would use process costing include the pharmaceutical and semiconductor industry.

Question 13

The president of the Gulf Coast Refining Corporation wants to know why his golfing partner, who is the chief financial officer of a large construction company, calculates his costs by the job, but his own corporation calculates costs by large units rather than by individual barrel of oil.

Question 14

Which of the following is False concerning process costing?

A) Process costing can only be used in manufacturing.
B) Process costing is used when outputs are homogeneous.
C) In process costing, labour and overhead costs are often combined and classified as conversion costs.
D) In process costing, some units will be incomplete at the end of the period.
E) Process costing averages unit costs of production.

Question 15

Costing systems that are used for costing like or similar units of products in mass production are called

A) inventory-costing systems.
B) job-costing systems.
C) process-costing systems.
D) weighted-average costing systems.
E) bulk costing systems.

Question 16

There are basically two distinct methods of calculating product costs.
Required:
Compare and contrast the two methods.

Question 17

Use the information below to answer the following question(s).
Plastic Molding, Inc.'s costing system utilizes two cost categories; direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of production. Conversion costs are allocated evenly throughout production. Data for the Assembly Department for March are:

Beginning inventory contained 5,000 units of goods that were 40 percent complete as to direct material, and 50 percent complete as to conversion. What is the equivalent units completed for materials and conversion at the beginning of the year, respectively?

A) 5,000 and 5,000
B) 1,000 and 5,000
C) 3,000 and 2,500
D) 2,000 and 2,500
E) 0 and 5,000

Question 18

Which of the following manufactured products should use process costing?

A) 767 jet aircraft
B) bags of cement
C) custom build houses
D) designer original evening gowns
E) expensive jewelry

Question 19

Describe three objectives of a costing system.

Question 20

When identical or similar units of products or services are mass produced, job-costing is used to calculate an average production cost for all units produced.

Question 21

The weighted-average process costing method distinguishes between units started in the previous period but completed during the current period and units started and completed during the current period.

Question 22

Treated Lumber Company specializes in processing treated wood. All direct materials are included at the inception of the sawing process and conversion is applied at the end of the process. For December there was no beginning inventory in the sawmill. Direct materials totalled $399,750 for the month and conversion costs totalled $165,000. work-in-process records revealed that 75,000 boardmetres were started in December and that 55,000 boardmetres were completed. Ending work-in-process units are complete only in respect to direct materials costs.
Required:
a. What is the total manufacturing cost per equivalent unit (boardmetres) for December?
b. What are the costs assigned to completed boardmetres in December?
c. What are the costs transferred out during December?
d. What are the amounts assigned to December's ending work-in-process inventory?

Question 23

The final result of the process costing procedure is to compute the dollar amount of the credit to a work-in-process account and the corresponding debit to finished goods and/or other work-in-process accounts.

Question 24

Unit costs do not fluctuate between periods.

Question 25

In the weighted-average costing method, the costs of direct materials in beginning inventory are not included in the cost per unit calculation since direct materials are almost always added at the start of the production process.

Question 26

Equivalent units in beginning work in process + equivalent units of work done in the current period equals equivalent units completed and transferred out in the current period minus equivalent units in ending work in process.

Question 27

Process-costing journal entries and job-costing journal entries are similar with respect to direct materials and conversion costs.

Question 28

In the weighted-average method, costs of units completed and transferred out, and in ending work-in-process, are calculated using average total costs obtained after merging costs of beginning work-in-process and costs added in the current period.

Question 29

The Zygon Corporation was recently formed to produce a semiconductor chip that forms an essential part of the personal computer manufactured by a major corporation. The direct materials are added at the start of the production process while conversion costs are added uniformly throughout the production process. June is Zygon's first month of operations, and therefore, there was no beginning inventory. Direct materials cost for the month totaled $895,000, while conversion costs equaled $4,225,000. Accounting records indicate that 475,000 chips were started in June and 425,000 chips were completed.
Ending inventory was 50% complete as to conversion costs.
Required:
a. What is the total manufacturing cost per chip for June?
b. Allocate the total costs between the completed chips and the chips in ending inventory.

Question 30

The Parson Valve Corporation was recently formed to produce a brass valve that forms an essential part of a compressor manufactured by a major corporation. The direct materials are added at the start of the production process while conversion costs are added uniformly throughout the production process. September is Parson's first month of operations, and therefore, there was no beginning inventory. Direct materials cost for the month totaled $1,400,000, while conversion costs equaled $1,800,000. Accounting records indicate that 800,000 valves were started in September and 700,000 valves were completed.
Ending inventory was 20% complete as to conversion costs.
Required:
a. What is the total manufacturing cost per valve for September?
b. Allocate the total costs between the completed valves and the valves in ending inventory.

Question 31

List and describe the five steps in process costing.

Question 32

The accounting (for a bakery) entry to record the transfer of rolls from the mixing department to the baking department is:

Question 33

Production costs are divided into three classifications: administrative costs, direct materials, and conversion costs in process costing.

Question 34

When a bakery transfers goods from the Baking Department to the Decorating Department, the accounting entry is:

A)
B)
C)
D)
E)

Question 35

Excalibur Ltd. began operations on October 1 of the current year. Its production requires that direct materials are added at the beginning of the process and conversion costs are incurred uniformly. Direct materials costs for October were $380,000 and conversion costs were $1,750,000. There were 80,000 units started during the month. The ending inventory was 25,000 units which were 60% complete. The cost per equivalent unit for conversion was:

A) $25.00
B) $21.88
C) $70.00
D) $116.67
E) $16.67

Question 36

Use the information below to answer the following question(s).
Father Time Clock Shop manufactures clocks on an automated assembly line. It utilizes two cost categories: direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of production, while conversion costs are allocated evenly throughout production, and the company uses weighted-average costing.
Data for the Assembly Department are:

Which of the following entries would be made to record the issue of direct materials in the Testing Department, under process-costing?

A) debit to Testing Department assets
B) debit to Testing Department Materials Inventory
C) debit to Work in Process - Testing Department
D) credit to Direct Materials
E) credit to Work in Process - Testing Department

Question 37

The weighted-average process costing method assigns the cost of the earliest equivalent units available to units completed and transferred out, and the cost of the most recent equivalent units worked on during the period to ending work-in-process inventory.

Question 38

Process-costing journal entries and job-costing journal entries are similar except for the multiple work-in-process accounts in the job-costing system.

Question 39

A key feature in process costing is that

A) total costs are divided by total equivalent units.
B) total units are multiplied by total costs.
C) (total costs times percentage allocated to each unit) are divided by total units.
D) (total units multiplied by the percentage allocated to each unit) is multiplied by total costs.
E) total units are multiplied by individual costs.

Question 40

Excalibur Ltd. began operations on October 1 of the current year. Its production requires that direct materials are added at the beginning of the process and conversion costs are incurred uniformly. Direct materials costs for October were $380,000 and conversion costs were $1,750,000. There were 80,000 units started during the month. The ending inventory was 25,000 units which were 60% complete. The cost per equivalent unit for direct materials was:

A) $4.75
B) $15.20
C) $5.85
D) $5.43
E) $7.92

Question 41

Use the information below to answer the following question(s).
Father Time Clock Shop manufactures clocks on an automated assembly line. It utilizes two cost categories: direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of production, while conversion costs are allocated evenly throughout production, and the company uses weighted-average costing.
Data for the Assembly Department are:

What is the total amount debited to the work-in-process account during the month of June?

A) $450,000
B) $2,000,000
C) $2,270,000
D) $2,450,000
E) $3,250,000

Question 42

Use the information below to answer the following question(s).
Father Time Clock Shop manufactures clocks on an automated assembly line. It utilizes two cost categories: direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of production, while conversion costs are allocated evenly throughout production, and the company uses weighted-average costing.
Data for the Assembly Department are:

What are the equivalent units for direct materials and conversion costs, respectively?

A) 1,200.5 units; 1,160.64 units
B) 1,050 units; 1,012.5 units
C) 1,050 units; 887.5 units
D) 962 units; 990 units
E) 990 units and 962 units

Question 43

Answer the following questions using the information below:
The Townsend Tractor Company manufactures small garden tractors on a highly automated assembly line. Its costing system uses two cost categories, direct materials and conversion costs. Each tractor must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Townsend Tractor uses weighted-average costing.

What is the total amount credited to the Work-in-Process account during the month of April?

A) $1,875,000.00
B) $2,370,000.00
C) $1,999,687.50
D) $2,295,937.50
E) $450,000.00

Question 44

Use the information below to answer the following question(s).
Father Time Clock Shop manufactures clocks on an automated assembly line. It utilizes two cost categories: direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of production, while conversion costs are allocated evenly throughout production, and the company uses weighted-average costing.
Data for the Assembly Department are:

Which one of the following methods focuses on the total costs and total equivalent units completed to date?

A) equivalent-units method
B) first-in, first-out method
C) standard-costs method
D) weighted-average method
E) last-in, last-out method

Question 45

Use the information below to answer the following question(s).
Father Time Clock Shop manufactures clocks on an automated assembly line. It utilizes two cost categories: direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of production, while conversion costs are allocated evenly throughout production, and the company uses weighted-average costing.
Data for the Assembly Department are:

What is the conversion cost per equivalent unit in June?

A) $1,254.32
B) $1,430.99
C) $987.65
D) $1,282.83
E) $1,320.17

Question 46

Which of the following is an assumption implicit in process-costing?

A) All completed units receive more direct material inputs than units in process.
B) All completed units receive less direct material inputs than units in process.
C) Opening inventory is always nil, for the cost calculations.
D) Ending inventory is always nil, for the cost calculations.
E) All completed units receive the same amount of direct material inputs and the same amount of conversion costs.

Question 47

Use the information below to answer the following question(s).
Father Time Clock Shop manufactures clocks on an automated assembly line. It utilizes two cost categories: direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of production, while conversion costs are allocated evenly throughout production, and the company uses weighted-average costing.
Data for the Assembly Department are:

When using the weighted-average method, work completed in beginning work-in-process and work done during the current period are included in the

A) equivalent units.
B) process units.
C) qualitative units.
D) standard units.
E) normal units.

Question 48

Use the information below to answer the following question(s).
Apex Disk Company operates a computer disk manufacturing plant. Direct materials are added at the end of the process. The following data were presented for August

Calculate the equivalent units for conversion costs using the weighted-average method.

A) 300,000 units
B) 350,000 units
C) 382,500 units
D) 450,920 units
E) 499,000 units

Question 49

Use the information below to answer the following question(s).
Father Time Clock Shop manufactures clocks on an automated assembly line. It utilizes two cost categories: direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of production, while conversion costs are allocated evenly throughout production, and the company uses weighted-average costing.
Data for the Assembly Department are:

What is the direct materials cost per equivalent unit during June?

A) $982.92
B) $1,226.61
C) $952.38
D) $1,123.81
E) $1,000.00

Question 50

Which of the following is NOT one of the procedures in process costing?

A) summarize the flow of physical units of output
B) assign costs to equivalent units based on their percentage of completion
C) compute equivalent unit costs
D) summarize total costs to account for
E) assign costs to completed units

Question 51

Use the information below to answer the following question(s).
Plastic Molding, Inc.'s costing system utilizes two cost categories; direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of production. Conversion costs are allocated evenly throughout production. Data for the Assembly Department for March are:

Which of the following journal entries correctly reflects the transfer of goods completed from the Assembly Department to the Testing Department?

A)
B)
C)
D)
E)

Question 52

The final of the accounting for processes with respect to process costing is to

A) compute the amount of debits to work-in-process.
B) compute the amount of credits to work-in-process.
C) compute the equivalent units for the period.
D) account for all units placed in process during the period.
E) account for all units in ending inventory at the end of the period.

Question 53

Use the information below to answer the following question(s).
Apex Disk Company operates a computer disk manufacturing plant. Direct materials are added at the end of the process. The following data were presented for August

Calculate equivalent units for direct materials using the weighted-average method.

A) 100,000 units
B) 350,000 units
C) 400,000 units
D) 450,000 units
E) 499,000 units

Question 54

Use the information below to answer the following question(s).
Father Time Clock Shop manufactures clocks on an automated assembly line. It utilizes two cost categories: direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of production, while conversion costs are allocated evenly throughout production, and the company uses weighted-average costing.
Data for the Assembly Department are:

What is the equivalent units for materials costs for May using the weighted average method?

A) 180,000 cushions
B) 160,000 cushions
C) 140,000 cushions
D) 118,000 cushions
E) 123,000 cushions

Question 55

Use the information below to answer the following question(s).
Father Time Clock Shop manufactures clocks on an automated assembly line. It utilizes two cost categories: direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of production, while conversion costs are allocated evenly throughout production, and the company uses weighted-average costing.
Data for the Assembly Department are:

What amount of conversion costs are assigned to ending work-in-process for June?

A) $160,986.38
B) $137,993.63
C) $141,111.00
D) $188,148.00
E) $111,110.63

Question 56

Answer the following questions using the information below:
The Townsend Tractor Company manufactures small garden tractors on a highly automated assembly line. Its costing system uses two cost categories, direct materials and conversion costs. Each tractor must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Townsend Tractor uses weighted-average costing.

What are the equivalent units for direct materials and conversion costs, respectively, for April?

A) 1,350 units; 1,350 units
B) 1,850 units; 1,690 units
C) 1,600 units; 1,550 units
D) 250 units; 200 units
E) 1,600 units; 1,350 units

Question 57

Which of the following assertions is true concerning conversion costs?

A) Direct labour costs are always included in conversion costs.
B) The conversion period (for conversion costs calculation) can only include one operation.
C) When conversion costs are estimated to be over 80% complete, then the cost-benefit constraint requires us to use 100% as the estimate.
D) Conversion costs are impossible to estimate with any reliability.
E) The conversion period often includes several operations, and it may be impossible to estimate conversion costs with any reliability in some cases.

Question 58

Use the information below to answer the following question(s).
Father Time Clock Shop manufactures clocks on an automated assembly line. It utilizes two cost categories: direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of production, while conversion costs are allocated evenly throughout production, and the company uses weighted-average costing.
Data for the Assembly Department are:

How many cushions were started during May?

A) 60,000 cushions
B) 120,000 cushions
C) 140,000 cushions
D) 180,000 cushions
E) 223,000 cushions

Question 59

Use the information below to answer the following question(s).
Father Time Clock Shop manufactures clocks on an automated assembly line. It utilizes two cost categories: direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of production, while conversion costs are allocated evenly throughout production, and the company uses weighted-average costing.
Data for the Assembly Department are:

What is the equivalent units for conversion costs for May using the weighted average method?

A) 180,000 cushions
B) 160,000 cushions
C) 140,000 cushions
D) 118,000 cushions
E) 123,000 cushions

Question 60

Use the information below to answer the following question(s).
Father Time Clock Shop manufactures clocks on an automated assembly line. It utilizes two cost categories: direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of production, while conversion costs are allocated evenly throughout production, and the company uses weighted-average costing.
Data for the Assembly Department are:

Process-costing systems separate costs into cost categories according to which factor(s)?

A) physical units
B) indirect labour
C) fixed and variable costs
D) standard costs
E) direct materials, conversion costs, and in some cases, transferred-in costs

Question 61

Answer the following questions using the information below:
The Townsend Tractor Company manufactures small garden tractors on a highly automated assembly line. Its costing system uses two cost categories, direct materials and conversion costs. Each tractor must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Townsend Tractor uses weighted-average costing.

What amount of direct materials costs are assigned to the ending Work-in-Process account for April?

A) $248,387.10
B) $250,000.00
C) $143,750.00
D) $145,312.50
E) $116,250.00

Question 62

Standard costing is not possible in a firm that uses process costing.

Question 63

The cost of units completed can differ materially between the weighted average and the FIFO methods of process costing.

Question 64

Select the true statement regarding process costing.

A) The degree of completion for conversion costs in ending work-in-process depends on the amount of direct materials used during the period.
B) Because it tracks beginning inventory's actual costs of completion, the weighted-average method is the most accurate process costing system.
C) Estimating the degree of completion is usually easier for conversion costs than for transferred-in costs.
D) Estimating the degree of completion is usually easier for direct materials than for conversion costs.
E) The accuracy of the completion percentages depends on the accounting system used.

Question 65

Answer the following questions using the information below:
The Townsend Tractor Company manufactures small garden tractors on a highly automated assembly line. Its costing system uses two cost categories, direct materials and conversion costs. Each tractor must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Townsend Tractor uses weighted-average costing.

What amount of conversion costs are assigned to the ending Work-in-Process account for April?

A) $143,750.00
B) $145,312.50
C) $180,000.00
D) $250,000.00
E) $116,250.00

Question 66

Answer the following questions using the information below:
The Townsend Tractor Company manufactures small garden tractors on a highly automated assembly line. Its costing system uses two cost categories, direct materials and conversion costs. Each tractor must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Townsend Tractor uses weighted-average costing.

What is the conversion cost per equivalent unit in April?

A) $1,250.00
B) $900.00
C) $575.00
D) $581.25
E) $1,241.94

Question 67

Scarborough Chemical placed 440,000 litres of direct materials into the mixing process. At the end of the month, 20,000 litres were still in process, 30 percent converted as to labour and factory overhead. All direct materials are placed in mixing at the beginning of the process and conversion costs occur evenly during the process. Scarborough Chemical uses weighted-average costing.
Required:
a. Determine the equivalent units in process for direct materials and conversion costs assuming there was no beginning inventory.
b. Determine the equivalent units in process for direct materials and conversion costs assuming that a beginning inventory of 24,000 litres of chemicals were 40 percent complete as to conversion costs prior to the addition of the 440,000 litres.

Question 68

Calendar Time Company prints calendars. All direct materials are included at the inception of the printing process. There were 20,000 units in beginning inventory with a direct material cost of $1,000 in March. Direct materials totalled $26,000 for the month. work-in-process records revealed that 160,000 calendars were started in March and that a total of 144,000 were completed. Ending work-in-process units are complete in respect to direct materials costs and contain no labour and overhead costs. The weighted-average method is used by Calendar Time.
Required:
a. Determine the equivalent units of materials.
b. What are the material costs assigned to completed calendars?
c. What amount of materials is assigned to the ending work-in-process inventory?

Question 69

Weighty Steel processes a single type of steel. For the current period the following information is given: All materials are added at the beginning of the production process. The beginning inventory was 40% complete as to conversion, while the ending inventory was 30% completed for conversion purposes.
Weighty uses the weighted-average costing method.
What is the total cost assigned to the units completed and transferred this period?

A) $107,010
B) $109,440
C) $113,160
D) $120,100

Question 70

Answer the following questions using the information below:
The Townsend Tractor Company manufactures small garden tractors on a highly automated assembly line. Its costing system uses two cost categories, direct materials and conversion costs. Each tractor must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Townsend Tractor uses weighted-average costing.

What is the direct materials cost per equivalent unit during April?

A) $1,250.00
B) $1,241.94
C) $575.00
D) $581.25
E) $900.00

Question 71

The first-in, first-out process-costing method computes unit costs by confining equivalent units to work only done during the current period.

Question 72

Amana Woolens is a manufacturer of wool cloth. The information for February is as follows:
Beginning work-in-process was half converted as to labour and overhead. Direct materials are added at the beginning of the process. All conversion costs are incurred evenly throughout the process. Ending work-in-process was 60 percent complete.
Required:
Using the weighted-average method determine the assignment of costs to units transferred-out and ending inventory.

Question 73

List and describe the procedures required in process costing from summarizing the physical flow of units through assigning the costs to the completed units and the units in ending inventory.

Question 74

A distinctive feature of the FIFO process costing method is that the work done on beginning inventory before the current period is averaged with work done in the current period.

Question 75

Marv and Vicki own and operate a vegetable canning plant. In recent years their business has grown tremendously and at any point in time they may have 30 to 35 different vegetables being processed. Also, during the peak summer months there are several thousand bushels of vegetables in some stage of being processed at any one time. With the company's growth during the past few years the owners decided to employ an accountant to provide cost estimations on each vegetable category and prepare monthly financial statements. Although the accountant is doing exactly as instructed, Marv and Vicki are confused about the monthly operating costs. Although they process an average of 50,000 canned units a month, the monthly production report fluctuates wildly.
Required:
Explain how income can fluctuate when sales are relatively stable.

Question 76

Process-costing systems using standard costs usually accumulate actual costs separately from the inventory accounts.

Question 77

Four Seasons Company makes snow blowers. Materials are added at the beginning of the process and conversion costs are uniformly incurred. At the beginning of September the work-in-process is 40 percent complete and at the end of the month it is 60 percent complete. Other data for the month include:
Beginning work-in-process costs:
Required:
a. Using the weighted-average method determine the assignment of costs to units transferred-out and ending inventory.
b. Prepare journal entries to record transferring of materials to processing; and, the cost of the units completed and transferred from processing to finished goods.

Question 78

Activity-based costing has more applicability in a process-costing system than in a job-costing environment.

Question 79

The first-in, first-out process-costing method assumes that units in beginning inventory are completed during the current accounting period.

Question 80

The following production-cost worksheet has been prepared for the month of December for Ag Chemical.
Assignment of costs:
Work in process, ending
Required:
a. Record costs of materials put into process for December.
b. Record conversion costs put into process in December.
c. Record goods transferred-out to finished goods for December.