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Exam 18: Process Cost Systems

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Question 91

Multiple Choice

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The number of equivalent units of production for material costs for the period was

A) 34,000
B) 29,800
C) 29,000
D) 32,000

E) B) and D)
F) B) and C)

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Question 92

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A firm produces its products by a continuous process involving three production departments, 1 through 3. Present entries to record the following selected transactions related to production during August: a) Materials purchased on account, $120,000 b) Material requisitioned for use in Department 1, $125,700, of which $124,200 entered directly into the product c) Labor cost incurred in Department 1, $195,400, of which $174,000 was used directly in the manufacture of the product d) Factory overhead costs for Department 1 incurred on account, $54,700 e) Depreciation on machinery in Department 1, $29,200 f) Expiration of prepaid insurance chargeable to Department 1, $7,000 g) Factory overhead applied to production in Department 1, $106,300 h) Output of Department 1 transferred to Department 2, $362,700

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Question 93

Multiple Choice

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All of the following are characteristics of a process cost system except

According to the just-in-time philosophy,

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

The journal entry to record the flow of costs into Department 2 for applied overhead is

Everett Company's inventory at December 31, and the costs charged to Work in Process-Department B during December are as follows: $\begin{array}{ll}500 \text { units, } 60 \% \text { completed } & \$ 3,460 \\\text { From Department A, 10,000 units } & 36,300 \\\text { Direct labor } & 7,960 \\\text { Factory overhead } & 12,500\end{array}$ During December, all direct materials are transferred from Department A, the units in process at December 1 were completed. Of the 10,000 units entering the department, all were completed except 1,200 units which were 25% completed as to conversion costs. Inventories are costed by the first-in, first-out method. Prepare a cost of production report for December.

The cost of production report reports the cost charged to production and the costs allocated to finished goods and work in process.

Match each phrase that follows with the term a-h) it describes. -costing system used by a company producing custom window treatments

In the manufacture of 10,000 units of a product, direct materials cost incurred was $165,000, direct labor cost incurred was $105,000, and applied factory overhead was $53,000. What is the total conversion cost?

Equivalent units of production are always the same as the total number of physical units finished during the period.

Once equivalent units are calculated for materials, this number will also be used for direct labor and factory overhead.

Which of the following costs incurred by a tool manufacturer would not be included in conversion costs?

The Mountain Springs Water Company has two departments, Purifying and Bottling. The Bottling Department received 58,000 liters from the Purifying Department. During the period, the Bottling Department completed 56,000 liters, including 4,000 liters of work in process at the beginning of the period. The ending work in process was 6,000 liters. How many liters were started and completed during the period?

The cost of production report summarizes 1) the units for which the department is accountable and the units to be assigned costs and 2) the costs charged to the department and the allocation of those costs.

When a process cost accounting system records the purchase of materials, the Materials account is credited.

Equivalent production units are generally determined for

The number of equivalent units produced with respect to direct materials costs is

The FIFO method of process costing is simpler than the Average cost method.

Austin Co. manufactures a product called Aster in a three-process series. All materials are introduced at the beginning of the first process. Austin uses the first-in, first-out method of inventory costing. Unit and cost data for the first process Department A) for the month of December follow: Prepare Austin's Department A cost of production report for December.