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Exam 20: Process Costing

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Question 51

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Describe the flow of overhead costs in a process costing system, including accounts used.

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As actual overhead costs are incurred fo...

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Question 52

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A company's January 1 Work in Process inventory contained 30,000 units that were 25% complete with respect to direct labor. The beginning inventory was completed this year and another 120,000 units were started. Of those started, 80,000 were finished and the remaining 40,000 were 30% complete. Calculate the equivalent units of production for the year using the FIFO method.

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Question 53

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An organizational unit of a factory that has the responsibility for partially manufacturing or producing a product is called a:

If a department that applies process costing starts the reporting period with 50,000 physical units that were 25% complete with respect to direct materials and 40% complete with respect to direct labor, it must add 12,500 equivalent units of direct materials and 20,000 equivalent units of direct labor to complete them.

Since the process cost summary describes the activities of a production department for a specified reporting period, it does not present information about any costs incurred in prior periods.

Sparky Corporation uses the weighted-average method of process costing. The following information is available for February in its Molding Department: Units: Beginning Inventory: 25,000 units, 100% complete as to materials and 55% complete as to conversion. Units started and completed: 110,000. Units completed and transferred out: 135,000. Ending Inventory: 30,000 units, 100% complete as to materials and 30% complete as to conversion. Costs: Costs in beginning Work in Process - Direct Materials: $43,000. Costs in beginning Work in Process - Conversion: $48,850. Costs incurred in February - Direct Materials: $287,000. Costs incurred in February - Conversion: $599,150. - Calculate the equivalent units of materials.

Prepare the required general journal entries to record the following transactions for the Ringer Company. a. Purchased $40,000 of raw materials on account. b. Used $12,000 of direct materials in the production department. c. Used $5,000 of indirect materials.

A company's January 1 Work in Process inventory contained 30,000 units that were 25% complete with respect to direct labor. The beginning inventory was completed this year and another 120,000 units were started. Of those started, 80,000 were finished and the remaining 40,000 were left 20% complete. Calculate the equivalent units of production for the year using the weighted average method.

Refer to the following information about the Finishing Department in the Davidson Factory for the month of June. Davidson Factory uses the FIFO method of inventory costing. Compute the equivalent cost per unit for direct materials, direct labor and overhead for June.

At the beginning of the month, the Painting Department of Skye Manufacturing had 20,000 units in inventory, 70% complete as to materials, and 20% complete as to conversion. The cost of the beginning inventory, $28,650, consisted of $22,400 of material costs and $6,250 of conversion costs. During the month the department started 115,000 units and transferred 120,000 units to the next manufacturing department. Costs added in the current month consisted of $229,600 of materials costs and $540,500 of conversion costs. At the end of the month, the department had 15,000 units in inventory, 40% complete as to materials and 10% complete as to conversion. If Skye Manufacturing uses the weighted average method of process costing, compute the costs per equivalent unit of materials and conversion respectively for the Painting Department.

On a process cost summary, the total costs to account for (the processing costs for the period plus the Work in Process at the end of the period) should equal ________ (________ plus ________).

If Department L uses $53,000 of direct labor and Department M uses $21,000 of direct labor, the following journal entry would be recorded using a process costing system: $\begin{array}{l}\text { Work in Process Inventory, Department L } & 53,000 \\\text { Work in Process Inventory, Department M } & 21,000 \\\text { Factory Wages Payable } &&74,000\end{array}$

In process costing there is never a balance remaining in Factory Overhead that needs to be closed at period end.

Sparky Corporation uses the weighted-average method of process costing. The following information is available for February in its Molding Department: Units: Beginning Inventory: 25,000 units, 100% complete as to materials and 55% complete as to conversion. Units started and completed: 110,000. Units completed and transferred out: 135,000. Ending Inventory: 30,000 units, 100% complete as to materials and 30% complete as to conversion. Costs: Costs in beginning Work in Process - Direct Materials: $43,000. Costs in beginning Work in Process - Conversion: $48,850. Costs incurred in February - Direct Materials: $287,000. Costs incurred in February - Conversion: $599,150. - Calculate the cost per equivalent unit of materials.

Williams Company computed its cost per equivalent unit for direct materials to be $2.60 and its cost per equivalent unit for conversion to be $3.75. A total of 250,000 units of product were completed and transferred out as finished goods during the month. The ending Work in Process inventory consists of 36,000 equivalent units of direct materials and 36,000 equivalent units of conversion costs. The amount that should be reported in ending Work in Process Inventory is:

Refer to the following information about the Shaping Department of the Minnesota Factory for the month of August. Minnesota Factory uses the FIFO method of inventory costing. The cost per equivalent unit of materials is $10.00, and the cost per equivalent unit of labor and overhead is $22.00. Compute the cost that should be assigned all units that were completed and transferred during August. $\begin{array} { l | l | l } & \begin{array} { l } \text { Equival ent } \\\text { Units }\end{array} & \begin{array} { l } \text { Total } \\\text { Cost }\end{array} \\\hline \text { Beginning Work in Procest: } & & \\\hline \text { Costs from prior month } & & \$ 7,000 \\\hline \text { Materials added } & 300 & \\\hline \text { Labor and overhead added } & 375 & \\\hline \text { Started and completed goods: } & & \\\hline \text { Materials added } & 2,000 & \\\hline \text { Labor and overhead added } & 2,000 & \\\hline \text { Fnding Work in Procest: } & & \\\hline \text { Materials added } & 320 & \\\hline \text { Labor and overhead added } & 360 &\end{array}$

Prepare general journal entries to record the following production activities for Oaks Manufacturing. a. Purchased $82,000 of raw materials on credit. b. Used $63,500 of direct materials in production. c. Used $12,800 of indirect materials.

Dazzle, Inc. produces beads for jewelry making use. The following information summarizes production operations for June. The journal entry to record June production activities for direct material usage is: $\begin{array} { | l | r | } \hline \text { Direct materials used } & \$ 87,000 \\\hline \text { Direct labor used } & 160,000 \\\hline \text { Predetermined overhead rate (based on direct labor) } & 155 \% \\\hline \text { Goods transferred to finished goods } & 432,000 \\\hline \text { Cost of goods sold } & 444,000 \\\hline \text { Credit sales } & 810,000 \\\hline\end{array}$

In process costing, the cost object is the process and in job costing, the cost object is a job.

Process costing is applied to operations with repetitive production and noncustomized products.