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Exam 3: Process Costing and Analysis

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Question 21

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Which of the following products is most likely to be produced in a process operation?

A) Airplanes
B) Cereal
C) Bridges
D) Designer bridal gowns
E) Custom cabinets

F) A) and E)
G) C) and E)

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Question 22

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Process costing systems consider overhead costs to include those costs that cannot be tied to individual processes.

A) True
B) False

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Question 23

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Wilturner Company incurs $82,000 of labor related directly to the product in the Assembly Department, $31,000 of labor related to the Assembly Department as a whole, and $18,000 of labor for services that help production in both the Assembly and Finishing departments. The journal entries to record the labor for the Assembly Department would include:

A process cost summary for a production department accounts for all costs assigned to that department during the period plus costs that were in the department's Work in Process Inventory account at the beginning of the period.

Luker Corporation uses a process costing system. The company had $160,500 of beginning Finished Goods Inventory on October 1. It transferred in $837,000 of units completed during the period. The ending Finished Goods Inventory balance on October 31 was $158,200. The entry to account for the cost of goods manufactured during October is:

A production department's output for the most recent month consisted of 8,000 units completed and transferred to the next stage of production and 5,000 units in ending Work in Process inventory. The units in ending Work in Process inventory were 50% complete with respect to both direct materials and conversion costs. Calculate the equivalent units of production for the month, assuming the company uses the weighted average method.

The managers of process operations focus on the series of repetitive processes, or steps, resulting in a noncustomized product or service.

In a process costing system, the purchase of raw materials is debited to Raw Materials Inventory.

Job order costing and process costing are two major costing systems used in manufacturing. Briefly contrast the characteristics of these two systems.

Following is a partial process cost summary for Mitchell Manufacturing's Canning Department. If the units completed were transferred to the Labeling Department, what is the appropriate journal entry to transfer the direct materials?

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 conversion.

Andrews Corporation uses the weighted-average method of process costing. The following information is available for February in its Polishing Department: The cost per equivalent unit of production for direct materials is:

In a process costing accounting system, factory wages are debited to ________, when direct labor is used. When indirect labor is used, the ________ account is debited. In both cases the ________ is credited.

During March, the production department of a process operations system completed and transferred to finished goods 25,000 units that were in process at the beginning of March and 110,000 units that were started and completed in March. March's beginning inventory units were 100% complete with respect to materials and 55% complete with respect to conversion. At the end of March, 30,000 additional units were in process in the production department and were 100% complete with respect to materials and 30% complete with respect to conversion. Compute the number of equivalent units with respect to both materials and conversion respectively for March using the weighted-average method.

Equivalent units of production is an engineering term used to describe the process by which one company attempts to manufacture units of a product that are equivalent to the product manufactured by a competitor.

Port Manufacturing Company uses a process costing system. Materials are added at the beginning of the process. Direct labor and overhead are added evenly throughout the process. The company uses monthly reporting periods for its weighted-average process costing. The following are the operating and cost data information for October. The October 1 beginning Work in Process Inventory consisted of 20,000 units. The costs for this inventory are $82,500 of direct materials, $24,400 of direct labor, and $48,800 of factory overhead. Factory overhead is applied at 200% of direct labor cost. In addition to the beginning inventory costs, the company issued the following costs into Work in Process Inventory; direct materials, $240,000; direct labor, $68,000; factory overhead, $136,000. During October, the company completed and transferred 60,000 units of its product to finished goods. At the end of the month, the Work in Process inventory consisted of 15,000 units that were 40% complete with respect to direct labor and factory overhead and 100% complete with respect to materials. Prepare the company's process cost summary for October using the weighted average method.

Hybrid costing systems can only be applied to manufacturing.

What is meant by equivalent units of production, and why are they important when a process costing system is used?

In process costing, a ________ is used to apply factory overhead.

Process costing systems are used only by companies that manufacture physical products; companies that provide services do not use process costing.