Deck 28: Process Cost Accounting

Question 1

In a process cost accounting system, a separate Work in Process Inventory account is maintained for each producing department.

Answer 1

True

Question 2

In the ____________________ cost accounting system, costs for materials, labor, and manufacturing overhead are charged to the Work in Process Inventory accounts of the producing departments.

Answer 2

process

Question 3

In a process cost accounting system, the average unit cost of a product is determined by dividing the total manufacturing cost incurred by the number of units placed in production during the period.

Answer 3

False

Question 4

Under the average cost method, the beginning inventory amount for each cost element is added to the amount of that cost element incurred during the current period.

Question 5

At the end of the month, the balance in the Manufacturing Overhead control account is closed into the departmental work in process accounts.

Question 6

Equivalent production units are determined for materials and labor but not for manufacturing overhead.

Question 7

The ending work in process inventory does not appear on the following month's cost of production report.

Question 8

In the manufacturing overhead subsidiary ledger, a departmental cost sheet is set up for each producing and each service department.

Question 9

An ending work in process inventory of 500 units that are 40 percent complete is equivalent to ____________________ units of production.

Question 10

Goods transferred to another department for further processing are nonetheless considered 100 percent complete on the cost of production report of the department making the transfer.

Question 11

When the average cost method is used, units in beginning inventory which are 40 percent complete are multiplied by 60 percent to compute equivalent units of production.

Question 12

The entry to record the transfer of goods from Department A to Department B would include a debit to the Work in Process account for Department
A.

Question 13

The data about costs, ___________________, and equivalent production is assembled in a cost of production report.

Question 14

A cost of production report provides separate sections to summarize quantities and costs.

Question 15

To obtain meaningful unit costs in a process cost accounting system, the work accomplished must be measured in ____________________ production units.

Question 16

On a cost of production report, the total of the costs of products transferred out of a department and the cost of the ending work in process in the department must equal the cumulative total cost for the department.

Question 17

In the process cost accounting system, the ____________________ of the ending work in process is estimated.

Question 18

To compute the unit cost of production for a year, the beginning inventory cost is added to the current period manufacturing costs, and the total is divided by the equivalent units of production.

Question 19

The units transferred in from a prior department are included in the quantity to be accounted for on the cost of production report for the receiving department.

Question 20

Materials issued to production are recorded by debiting Raw Materials Inventory and crediting the departmental work in process accounts.

Question 21

At the end of the month, the entry to close the Manufacturing Overhead control account includes a ____________________ to Manufacturing Overhead.

Question 22

When finished goods are sold, the entry to record the cost of goods sold includes a ____________________ to the Cost of Goods Sold account.

Question 23

Materials issued to production are recorded by ____________________ the departmental work in process accounts.

Question 24

The Painting Department transferred 6,000 units to the finished goods storeroom during a month. There was no beginning work in process inventory, but 800 units were still in process at the end of the month, and were 70% complete, and production costs incurred totaled $21,320. Inventory costs would be determined using a unit cost of

A) $3.55.
B) $3.42.
C) $3.25.
D) $3.14. Equivalent unit = 6,000 + (800 x 70%) = 6560.
Unit cost = 21,320/6560 = 3.25.

Question 25

A process cost accounting system may be viewed as a monthly ____________________ cost system.

Question 26

On a cost of production report, the ____________________ total cost must equal the total costs accounted for.

Question 27

A firm had 600 units in its work in process inventory at the beginning of a month. Of these units, 30 percent were complete with respect to labor, materials, and overhead. The firm transferred 5,000 units to the finished goods inventory during the month. It had 500 units of which 40 percent were complete and still in process at the end of the month. Equivalent production for the month was

A) 5,680 units.
B) 5,380 units.
C) 5,200 units.
D) 5,180 units. 5000 + (500 x 40%).

Question 28

A department transferred 7,000 units to the finished goods storeroom during a month. There was no beginning work in process inventory, but 500 units were still in process at the end of the month. Equivalent production for the month was 7,400 units, and production costs incurred totaled $16,800. Inventory costs would be determined using a unit cost of

A) $2.27.
B) $2.40.
C) $2.24.
D) $2.58. 16,800/7,400

Question 29

Simon Productions Company had a beginning work in process inventory totaling $6,000. During the current period, the company added materials costs of $12,300, labor cost of $14,500 and overhead of $18,200. Equivalent production was 12,000 units, and 9,000 units were completed and transferred to the finished goods inventory. Inventory costs would be determined using a unit cost of

A) $5.67.
B) $3.75.
C) $4.25.
D) $8.50. (6,000 +12,300 + 14,500 + 18,200)/12,000 = 4.25.

Question 30

Process cost accounting is most appropriate

A) when there is continuous production on a single product.
B) when a company produces more than one product in batches rather than on a continuous basis.
C) for companies with either continuous or batch processing of different products.
D) for all manufacturing companies.

Question 31

The ending balance of a(n) ____________________ Inventory account for a producing department must agree with the amount shown for that department in the cost of production report.

Question 32

The ending Work in Process inventory in the mixing department contains 300 units that are 70% complete with respect to labor costs. How many equivalent units are in the ending inventory?

A) 300 units.
B) 140 units.
C) 70 units.
D) 210 units.

Question 33

Costs of ____________________ departments are allocated as manufacturing overhead to the producing departments that benefit.

Question 34

When the ____________________ cost method is used to calculate unit costs, the beginning inventory costs are added to the current period costs, and the sum is divided by the equivalent production units.

Question 35

During one month, 3,000 units of a product were completed and 800 units were 20 percent complete and still in process. The equivalent production for the month is

A) 3,800 units.
B) 4,000 units.
C) 3,040 units.
D) 3,160 units. 3,000 + (800 x 20%).

Question 36

A cost of production report usually contains a(n) ____________________ schedule and a cost schedule.

Question 37

The Completion Department transferred 8,000 units to the finished goods storeroom during a month. There was no beginning work in process inventory, but 1,000 units were still in process at the end of the month, and were 40% complete. Inventory costs at the end of the month were $3.50. What were total production costs for the month?

A) $28,000.
B) $29,400.
C) $30,100.
D) $31,500. (8,000 + (1,000 x 40%)) x 3.50.

Question 38

McGill Manufacturing had 900 units in its work in process inventory at the beginning of a month. Of these units, 40 percent were complete with respect to labor, and 100% complete with respect to materials, and overhead. The firm transferred 4,000 units to the finished goods inventory during the month. It had 600 units of which 30 percent were complete and still in process at the end of the month. Equivalent production for the month was

A) 4,600 units.
B) 4,420 units.
C) 4,240 units.
D) 4,180 units. 4000 + (600 x 30%).

Question 39

Equivalent production units must be computed separately for materials, labor, and ____________________ whenever the stages of completion for the elements are different.

Question 40

A firm had a beginning work in process inventory totaling $4,000 and current period costs of $22,500. Equivalent production was 5,000 units, and 3,000 units were completed and transferred to the finished goods inventory. Inventory costs would be determined using a unit cost of

A) $8.83.
B) $5.30.
C) $4.50.
D) $7.50. (4,000 + 22,500)/5,000.

Question 41

The two sections of the cost of production report are

A) the total to be accounted for and the total accounted for.
B) the costs assigned to the goods transferred out and the costs assigned to the goods still in process.
C) the summary of quantities and the summary of costs.
D) beginning inventory plus goods started and goods transferred out and ending inventory.

Question 42

In a process cost accounting system, the average unit cost of a product is determined by dividing the appropriate costs by

A) the number of units placed in production during the period.
B) the number of units transferred to another department.
C) the equivalent production units.
D) the number of units transferred to the finished goods inventory.

Question 43

When beginning inventory is part of the production report, costs from the prior department are included. They are

A) the beginning inventory amount and the costs transferred in.
B) the beginning inventory amount.
C) the costs transferred in.
D) the beginning inventory costs transferred in.

Question 44

The source of the cost data that appears in a cost of production report is

A) the Finished Goods Inventory account.
B) the job order cost sheet.
C) the prior period income statement.
D) the Work in Process Inventory accounts.

Question 45

Fraser Manufacturing had no work in process at the beginning of a month. It transferred 6,000 units to finished goods during the month, and 800 units were still in process at the end of the month. Equivalent production for the month was 6,480 units. At what stage of completion were the unfinished units at the end of the month?

A) 60 percent
B) 40 percent
C) 30 percent
D) 80 percent (6,480 - 6,000)/800.

Question 46

Unit Manufacturing Company had no work in process at the beginning of a month. At the end of the month, 600 units were still in process at the end of the month, and were 40% complete. Equivalent production for the month was 5,240 units. How many units were transferred out of production to finished goods during the month?

A) 5,240 units.
B) 5,000 units.
C) 4,760 units.
D) 4,400 units. 5,240 - (600 x 40%).

Question 47

During the month, 2,700 units of a product were completed and 800 units were 60% complete with respect to labor and still in process. The total equivalent units of production for labor for the month is

A) 2,700 units.
B) 2,400 units.
C) 3,180 units.
D) 4,320 units. 2,700 + (800 x 60%).

Question 48

The current department costs categories are

A) work in process-beginning costs, started in production costs, and transferred in costs.
B) materials costs, labor costs, and manufacturing overhead costs.
C) work in process-beginning costs, transferred out to next department costs, and work in process-ending costs.
D) started in production costs, transferred in from prior department costs, and transferred out to next department costs.

Question 49

A firm had no work in process at the beginning of a month. It transferred 4,000 units to finished goods during the month, and 500 units were still in process at the end of the month. Equivalent production for the month was 4,400 units. At what stage of completion were the unfinished units at the end of the month?

A) 67 percent
B) 75 percent
C) 20 percent
D) 80 percent (4,400 - 4,000)/500.

Question 50

Rounding is often necessary to make the Production Report cumulative cost total agree to the total costs accounted for. In the following periods, the amount of the adjustment is either added to or subtracted from the _____________ in work in process.

A) direct materials
B) direct labor
C) manufacturing overhead
D) credit entry

Question 51

The part of the Cost Schedule showing the total and unit cost of each element and the cumulative cost total is the

A) total costs transferred out.
B) costs accounted for.
C) costs to be accounted for.
D) total work in process.

Question 52

Each section of the production report has two parts. They reconcile

A) the total to be accounted for and the total accounted for.
B) the beginning inventory plus units started and the units started and completed and the ending inventory.
C) the costs in beginning work in process and the costs added during the period.
D) the beginning inventory and the ending inventory.

Question 53

In a process cost accounting system,

A) the Finished Goods Inventory account is debited for the cost of completed units any time during the month.
B) the Work in Process Inventory accounts are used to accumulate the costs for labor, materials, and manufacturing overhead.
C) manufacturing overhead is not included in the determination of inventory costs.
D) inventory costs are calculated when goods are sold.

Question 54

Total costs accounted for consists of the

A) cumulative cost plus the work in process-ending costs.
B) total costs transferred out less the total work in process-ending costs.
C) cumulative cost plus total costs transferred out.
D) total costs transferred out plus the total work in process-ending costs.

Question 55

When finished goods are sold, the entry to record the cost of goods sold includes

A) a debit to Finished Goods Inventory and a credit to Cost of Goods Sold.
B) a debit to Cost of Goods Sold and a credit to Sales.
C) a debit to Cost of Goods Sold and a credit to Finished Goods Inventory.
D) a debit to Finished Goods Inventory and a credit to Sales.

Question 56

On a cost of production report, beginning work in process

A) is included in the quantity to be accounted for.
B) is included in the quantity accounted for.
C) is not included on the report.
D) appears on the job cost sheet only.

Question 57

During the month, 1,600 units of a product were completed and 900 units were two-thirds complete with respect to labor and still in process. The total equivalent units of production for labor for the month is

A) 2,200 units.
B) 2,400 units.
C) 2,500 units.
D) 2,600 units. 1,600 + 600.

Question 58

Equivalent production units may be computed

A) for labor only.
B) for labor and materials only.
C) for labor, materials, and manufacturing overhead.
D) for materials and manufacturing overhead only.

Question 59

The total accounted for consists of

A) the units started in production.
B) the units transferred out and the units in ending work in process.
C) the units started and the units transferred out.
D) the units transferred out and the units completed.

Question 60

At the end of the month, the entry to close the Manufacturing Overhead control account is recorded as

A) a debit to Manufacturing Overhead Applied and a credit to Manufacturing Overhead.
B) a debit to Work in Process Inventory accounts and a credit to Manufacturing Overhead.
C) a debit to Manufacturing Overhead and a credit to the Work in Process inventory accounts.
D) a debit to Manufacturing Overhead and a credit to Manufacturing Summary.

Question 61

The Vinh Corporation has two producing departments. Cost data from the firm's records for the month of January 2013 is given below. There were no beginning inventories.
Prepare equivalent production computations for each department.

Question 62

On October 1, 2012, there was no beginning inventory in the Bottling Department. During the month, production was started on 7,400 units. The total cost of materials was $29,600. All materials were placed in production at the start of the manufacturing process in the department. During the month, 5,800 units were transferred to the next department. There were 1,600 units still in process at the end of the month.
1. What is the cost per equivalent unit for materials?
2. What is the cost of materials in the goods transferred to the next department?
3. What is the cost of materials in the ending work in process inventory?

Question 63

Prepare the Quantity Schedule for Department J for October 2013 in good format from the information given.

Question 64

Jocose Company recorded the following journal entries. Write a description for each numbered journal entry. Number your descriptions to match the journal entry numbers.

Question 65

On July 1, 2013, there was no beginning inventory in Dept. A, the first department. During the month, production was started on 3,000 units. The total cost of materials was $18,000. All materials were placed in production at the start of the manufacturing process in the department. During the month, 2,400 units were transferred to the next department. There were 600 units still in process at the end of the month.
1. What is the cost per equivalent unit for materials?
2. What is the cost of materials in the goods transferred to the next department?
3. What is the cost of materials in the ending work in process inventory?

Question 66

Fill in the blanks in the Quantity Section of the following Production Report.

Question 67

The Vinh Corporation has two producing departments. Cost data from the firm's records for the month of January 2013 is given below. There were no beginning inventories.
Prepare a cost of production report for the Assembling Department.

Question 68

Data about production in Dept. B for June is given below. 1. Compute the equivalent units of production for the prior department costs.
2. Compute the equivalent units of production for materials.
3. Compute the equivalent units of production for labor and overhead.

Question 69

Data about production in the Processing Department for July is given below. 1. Compute the equivalent units of production for the prior department costs.
2. Compute the equivalent units of production for materials.
3. Compute the equivalent units of production for labor and overhead.

Question 70

Fill in the blanks in the Quantity Section of the following Production Report.

Question 71

The Vinh Corporation has two producing departments. Cost data from the firm's records for the month of January 2013 is given below. There were no beginning inventories.
Prepare a cost of production report for the Fabricating Department.

Question 72

Jocund Manufacturing produces exercise machines. In February, all the materials issued to Department X were entered into production. There was no beginning inventory. Department X started 6,100 units. During February, 5,300 units were transferred out-4,750 to Department Y and 550 to Finished Goods. Of the 900 units in ending inventory, 65% of the labor and overhead had been added during the month. Calculate the equivalent units of production for material and for Labor and Manufacturing Overhead.

Question 73

Complete the Cost Schedule for Department J from the information given.

Question 74

Kobold Company manufactures lamps. In May, Department B started 4,500 units. None had been transferred in from a prior department. Of the 4,500 units started, 4,250 were transferred out-3,850 to the next department, Department C, and 400 were transferred to Finished Goods. All the materials issued during May were used in production while only 70% of the labor and overhead was added to the ending inventory. Calculate the equivalent units for material and for the labor and manufacturing overhead.

Question 75

Cost data for a firm's first department, Dept. A, for June 2013 is given below.
Prepare a cost of production report for the month of June from the information given.

Question 76

In Gerth Manufacturing, production is started in the fabricating department. The work is then transferred to the finishing department where goods are completed and then transferred to the finished goods storeroom. Data about the company's costs during February 2013 are given below. During the month, products costing $45,000 were transferred from the fabricating department to the finishing department; goods costing $56,000 were transferred from the finishing department to finished goods inventory; and goods that cost $63,000 were sold on account for $79,000. Record the following events on page 3 of a general journal. Use February 28 as the date. Omit descriptions.
(a.) Place materials into production
(b.) Charge labor costs into production
(c.) Charge overhead costs into production
(d.) Transfer product from fabricating department to finishing department
(e.) Transfer finished goods from finishing department to finished goods inventory
(f.) Sale of goods
(g.) Record cost of goods sold

Question 77

The method that combines the cost of beginning inventory and the current costs of the period is the

A) market value process costing method.
B) method of net realizable value.
C) replacement cost method.
D) average method of process costing.

Question 78

Calculate the equivalent production units from the information given.

Question 79

Cost data for a firm's first department, Dept. A, for June 2013 is given below.
Prepare equivalent production computations for Dept. A from the information provided.

Question 80

Using the information given, what are the quantity to account for, the quantity accounted for, and the equivalent production units for the month of November for Department R?