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Exam 18: Process Cost Systems

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Question 81

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Process and job order cost systems are similar in all of the following ways except

A) both accumulate product costs-direct materials, direct labor, and factory overhead
B) both allocate product cost to units produced
C) both maintain perpetual inventories
D) both use job order cost cards

E) None of the above
F) A) and C)

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Question 82

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If 30,000 units of materials enter production during the first year of operations, 25,000 of the units are finished, and 5,000 are 50% completed, the number of equivalent units of production would be 28,500.

A) True
B) False

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Question 83

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If the products of a manufacturing process are produced to customer specifications, a process cost system is more appropriate than a job order cost system.

The estimated total factory overhead cost and total machine hours for Department 40 for the current year are $250,000 and 56,250, respectively. During January, the first month of the current year, actual machine hours used totaled 5,100 and factory overhead cost incurred totaled $22,000. a) Determine the factory overhead rate based on machine hours. b) Present the entry to apply factory overhead to production in Department 40 for January. c) What is the balance of Factory Overhead-Department 40 at January 31? d) Does the balance of Factory Overhead-Department 40 at January 31 represent over applied or under applied factory overhead? Round total cost to nearest dollar value.

The journal entry to record the flow of costs into Department 2 during the period for direct materials is

The last step in the preparation of a cost of production report is the calculation of equivalent units of production.

What is the total number of units to be assigned cost on the cost of production report for Department W?

The journal entry to record the flow of costs into Department 2 for direct labor is

The inventory at June 1 and costs charged to Work in Process-Department 60 during June are as follows: During June, 32,000 units were placed into production and 31,200 units were completed, including those in inventory on June 1. On June 30, the inventory of work in process consisted of 4,600 units which were 40% completed. Inventories are costed by the average cost method and all materials are added at the beginning of the process. Determine the following, presenting your computations: a) Equivalent units of production for conversion cost b) Conversion cost per equivalent unit and material cost per equivalent unit. c) Total and unit cost of finished goods completed in the current period d) Total cost of work in process inventory at June 30

All costs of the processes in a process costing system ultimately pass through the Cost of Goods Sold account.

Process manufacturing usually reflects a manufacturer that produces small quantities of unique items.

Explain the concept of equivalent units. Give an example to validate your explanation.

Which of the following would use a process costing system?

One of the primary uses of a cost of production report is to assist management in controlling production costs.

In applying the first-in, first-out method of costing inventories, if 8,000 units which are 30% completed are in process at June 1, 28,000 units are completed during June, and 4,000 units were 80% completed at June 30, the number of equivalent units of production for June was 28,600.

On August 1, Jones Corporation's Packaging Department had work in process inventory of 8,000 units that were 75% complete with respect to materials and 30% complete with respect to conversion costs. The cost of these units was $99,525 $62,000 transferred-in from previous departments, $28,775 in materials, and $8,750 in labor and overhead). During August, 125,000 units were transferred into the department. These units had accumulated costs in previous departments of $1,418,560. The packaging department incurred costs of $799,225 for materials and $498,010 for conversion costs in August and transferred 131,000 units out of the department. The 2,000 units remaining in ending inventory are 50% complete with respect to materials and 20% complete with respect to conversion costs. Jones uses the average cost method to cost its inventories. a) Calculate the cost per equivalent unit for transferred-in costs, materials, and conversion costs. b) Calculate the cost of the units transferred out of the department. c) Calculate the cost of the ending inventory.

Match each business that follows to the type of costing system a or b) it would typically use. -Gasoline refinery

Match each business that follows to the type of costing system a or b) it would typically use. -Home construction

The Bottling Department of Mountain Springs Water Company had 5,000 liters in beginning work in process inventory 20% complete). During the period, 58,000 liters were completed. The ending work in process inventory was 3,000 liters 90% complete). What are the equivalent units for conversion costs under the FIFO method?

In applying the first-in, first-out method of costing inventories, if 8,000 units which are 30% completed are in process at June 1, 28,000 units are completed during June, and 4,000 units were 75% completed at June 30, the number of equivalent units of production for June was 33,400.