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Exam 20: Process Cost Accounting

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Question 1

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A hybrid costing system would be most appropriate when:

A) A manufacturer is able to standardize processes while at the same time attempting to meet individual customer needs.
B) Large quantities of identical products are being produced.
C) The volume of production is low and costs are high.
D) There is no standardization of units of production.
E) All the products produced are unique.

F) B) and D)
G) D) and E)

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Question 2

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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 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 labor.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 labor.The production department incurred direct labor cost of $578,900 and its beginning inventory included labor cost of $54,700.Compute the direct labor cost per equivalent unit for the department using the weighted-average method.

A) $4.69.
B) $3.84.
C) $4.86.
D) $4.28.
E) $4.40.

F) A) and D)
G) All of the above

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Question 3

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

Wilturner Company incurs $74,000 of labor related directly to the product in the Assembly Department,$23,000 of labor not directly related to the product but related to the Assembly Department as a whole,and $10,000 of labor for services that help production in both the Assembly and Finishing departments.The amount of direct labor and factory overhead respectively are:

If the indirect labor cost in August for clerical and maintenance that help production in all departments was $123,000,the following journal entry would be recorded in a process costing system

A process cost summary is a managerial accounting report that describes all but which of the following?

Refer to the following information about the Shaping Department of the Minnesota Factory for the month of August.Minnesota Factory uses the weighted average 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 to the units that were started and completed during August.

At the beginning of the recent period,there were 900 units of product in a department,35% completed.These units were finished and an additional 5,000 units were started and completed during the period.800 units were still in process at the end of the period,25% completed.Using the weighted average method,the equivalent units produced by the department were:

The process cost summary presents calculations of the cost of units completed during the reporting period,but does not present any information about the ending Work in Process inventory.

Following is a partial process cost summary for Mitchell Manufacturing's Canning Department. The total materials costs transferred out of the Canning Department should be:

The second step in accounting for production activity in a period,after determining the physical flow of units,is to compute ______________________.

In a process costing system,factory labor costs incurred in a reporting period are presented on the income statement as Factory Labor Expense.

A process cost summary involves computations and analysis at four sequential steps.These are (1)_________, (2)_____________, (3)_______________,and (4)______________. Answers must appear in this order.

Pitt Enterprises manufactures jeans.All materials are introduced at the beginning of the manufacturing process in the Cutting Department.Conversion costs are incurred uniformly throughout the manufacturing process.As the cutting of material is completed,the pieces are immediately transferred to the Sewing Department.Information for the Cutting Department for the month of May follows. Work in Process,May 1 (50,000 units,100% complete for direct materials,40% complete with respect to direct labor and overhead;includes $70,500 of direct material cost;$34,050 of conversion costs) . Work in Process,May 31 (75,000 units,100% complete for direct materials;20% complete for conversion costs) . If Pitt Enterprises uses the FIFO method of process costing,compute the equivalent units for materials and conversion costs respectively for May.

Process costing systems are commonly used by companies that produce a large volume of standardized units on a continuous basis.

A system of accounting in which costs are accumulated and then measured per unit at the end of a period by combining costs per equivalent unit from various departments is a:

A ____________________ contains features of both process and job order costing systems.

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

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.

During the year,LT Corp.introduced 132,000 units into production and 144,000 units were completed and transferred to finished goods.At the end of the year,the company had 13,600 units in process that were 80% complete.Determine how many units the company had in Work in Process at the beginning of the year.