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Exam 20: Process Costing

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Question 21

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If Department C uses $10,000 of direct materials and Department D uses $15,000 of direct materials, the following journal entry would be recorded by the process costing system: $\begin{array}{l}\text { Work in Process Inventory, Department C } & 10,000 \\\text { Work in Process Inventory, Department D } & 15,000\\\text { Raw Materials Inventory }&&25,000\end{array}$

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Question 22

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What is a hybrid costing system? When is a hybrid costing system appropriate for a manufacturer?

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A hybrid costing system contains the fea...

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Question 23

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Hybrid systems contain features of both process and job order operations.

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

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.

The Fabricating Department started the current month with a beginning Work in Process inventory of $10,000. During the month, it was assigned the following costs: direct materials, $76,000; direct labor, $24,000; and factory overhead, 50% of direct labor cost. Also, inventory with a cost of $109,000 was transferred out of the department to the next phase in the process. The ending balance of the Work in Process Inventory account for the Fabricating Department is:

Match the following terms with the definitions. 1. ________ (1) Equivalent units of production 2. ________ (2) Job order costing system 3. (3) Hybrid costing system 4. ________ (4) Process operations 5. ________ (5) Process costing system 6. ________ (6) Materials consumption report 7. ________ (7) Process cost summary A. Costing system that measures costs per unit upon completion of a job. B. Document that summarizes the materials a department uses when inventory moves continuously through the manufacturing process during a reporting period; replaces materials requisition. C. Report of total costs charged to a department, describes its equivalent units of production achieved, and allocates costs among units worked on in the period. D. A manufacturing system that contains features of both process costing and job order costing systems. E. Number of units that could have been started and completed given the costs incurred during the period. F. System of measuring unit costs at the end of a period by combining costs per equivalent unit from each separate department. G. Mass production of similar products in a continuous flow of sequential processes.

Sparky Corporation uses the FIFO 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.

At the beginning of the month, the Forming Department of Martin Manufacturing had 10,000 units in inventory, 30% complete as to materials, and 10% complete as to conversion. During the month the department started 60,000 units and transferred 62,000 units to the next manufacturing department. At the end of the month, the department had 8,000 units in inventory, 80% complete as to materials and 60% complete as to conversion - If Martin Manufacturing uses the FIFO method of process costing, compute the equivalent units for materials and conversion respectively for the Forming Department.

In a process costing system, direct material costs incurred are recorded:

Companies that use a series of repetitive manufacturing processes to produce standardized products should use a process costing system.

In a process costing system, with the exception of the first department, each department receives output from the prior department as a partially processed product.

In process costing, factory overhead incurred does not usually equal that applied, which yields either ________ or ________ overhead.

Kominski Company completed and transferred 90,000 units during the current period. Based on the following information, determine the cost of the units completed during the current reporting period and journalize the transfer. $\begin{array} { l | l | l } & \begin{array} { l } \text { Direct } \\\text { Materials }\end{array} & \begin{array} { l } \text { Direct } \\\text { Labor/OH }\end{array} \\\hline \text { Costs of Beginning Work in Process: } & \$ 576,000 & \$ 400,000 \\\hline \text { Costs incurred this period } & 2,400,000 & 5,120,000 \\\hline \text { Equivalent urrits of production } & \$ 9,000 & 92,000\end{array}$

Richards Corporation uses the weighted-average method of process costing. The following information is available for October in its Fabricating Department: Units: Beginning Inventory: 80,000 units, 60% complete as to materials and 20% complete as to conversion. Units started and completed: 250,000. Units completed and transferred out: 330,000. Ending Inventory: 30,000 units, 40% complete as to materials and 10% complete as to conversion. Costs: Costs in beginning Work in Process - Direct Materials: $37,200. Costs in beginning Work in Process - Conversion: $79,700. Costs incurred in October - Direct Materials: $646,800. Costs incurred in October - Conversion: $919,300. - Calculate the equivalent units of conversion.

Using conversion cost per equivalent unit is appropriate for many businesses that use process costing because:

Which of the following is not one of the four steps in accounting for production activity and assigning costs during a period under a process cost system?

Conversion cost per equivalent unit is the combined cost of direct labor and factory overhead per equivalent unit.

A process cost summary involves computations and analysis at four sequential steps. These are (1) ________ (2) ________, (3) ________, and (4) ________.

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