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Exam 3: Process Costing

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Question 51

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Prepare the journal entries to record the following transactions for Kilts & More, a company that produces hand-sewn kilts to Americans celebrating at Irish Festivals around the country. a. Purchased $140,000 of material (3,500 yards) in cash. b. Issued $120,000 of material (3,000 yards) into production. c. Paid $45,000 cash in production labor costs. d. Applied overhead at the predetermined rate of $12 per yard. e. Incurred $42,000 of actual overhead costs, paid in cash. (Assume any difference between actual and applied overhead costs is adjusted directly to cost of goods sold.) f. Completed 5,000 kilts. (Approximately $51,000 of inventory remains in process, so the cost of each helmet is approximately $______.) g. Sold 4,500 kilts at $80.00 per unit. (All proceeds were collected in cash.) h. Disposed of any over- or under-applied overhead cost.

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Question 52

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How could a firm using the weighted average method of process costing calculate how many units were worked on during a period?

A) Add beginning units in inventory and units completed
B) Add beginning units in inventory and ending units in inventory
C) Add units completed and ending units in inventory
D) Add units started and units completed

E) None of the above
F) B) and D)

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Question 53

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The journal entry to record the purchase of direct materials for cash includes:

Livingston Co. uses process costing to account for the production of elastic bands. Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Beginning inventory consisted of $14,000 in materials and $8,000 in conversion costs. April costs were $72,000 for materials and $80,000 for conversion costs. During April 8,000 units were completed. Ending in process inventory was 4,000 units (100% complete for materials, 50% for conversion) . The cost per equivalent unit for conversion costs using the weighted average method would be:

Hamilton, Inc. manufactures units in two processes: Production and Finishing. All direct materials are added at the beginning of the Production process, while conversion costs are incurred evenly throughout the period for both Production and Finishing. Hamilton employs three inspectors: Kasey, Chad, and Lexi. Kasey inspects direct materials before they are added to Production (two pieces of direct materials per unit). Chad inspects units when the Production process is finished, after which they are immediately transferred to Finishing. Lexi inspects units at the end of the Finishing process. This period, none of the materials or units failed inspection. At the beginning of the period, 5,000 units had only "Inspected by Kasey" tags on them (these units were 70% complete), and 2,000 units had "Inspected by Kasey" and "Inspected by Chad" tags on them (these units were 60% complete). At the end of the period, 7,000 units had only "Inspected by Kasey" tags on them (these units were 50% complete). 1,000 units had only "Inspected by Kasey" and "Inspected by Chad" tags on them (these units were 90% complete), and 19,000 units had tags from all three inspectors on them (these units were 100% complete). Required: Determine the number of physical units using the weighted average method: a. in beginning Work in Process in Production during the period. b. started in Production during the period. c. transferred from Production to Finishing during the period. d. in ending Work in Process in Production during the period. e. in beginning Work in Process in Finishing during the period. f. in ending Work in Process in Finishing during the period. g. completed in Finishing during the period. Determine the number of equivalent units h. for direct materials for Production i. for conversion for Production j. for direct materials for Finishing k. for conversion for Finishing

Trout, Inc. prepared the following production report: Additional information: Trout adds direct materials at the beginning of the process, while conversion costs are incurred uniformly throughout the process. At the beginning of the period, Work in Process Inventory was 40% complete. At the end of the period, Work in Process Inventory was 70% complete. Required: Fill in the missing amounts.

Process costing often combines direct materials and direct labor into a single category called conversion costs

Hamilton, Inc. manufactures units in two processes: Production and Finishing. All direct materials are added at the beginning of the Production process, while conversion costs are incurred evenly throughout the period for both Production and Finishing. Hamilton employs three inspectors: Kelsey, Chad, and Lexi. Kelsey inspects direct materials before they are added to Production (two pieces of direct materials per unit). Chad inspects units when the Production process is finished, after which they are immediately transferred to Finishing. Lexi inspects units at the end of the Finishing process. During the current period, none of the materials or units failed inspection. At the beginning of the period, 5,000 units had only "Inspected by Kelsey" tags on them (these units were 70% complete), and 2,000 units had "Inspected by Kelsey" and "Inspected by Chad" tags on them (these units were 60% complete). At the end of the period, 7,000 units had only "Inspected by Kelsey" tags on them (these units were 50% complete). 1,000 units had only "Inspected by Kelsey" and "Inspected by Chad" tags on them (these units were 90% complete), and 19,000 units had tags from all three inspectors on them (these units were 100% complete). Required: Determine the number of physical units: a. in beginning Work in Process in Production during the period. b. started in Production during the period. c. transferred from Production to Finishing during the period. d. in ending Work in Process in Production during the period. e. in beginning Work in Process in Finishing during the period. f. in ending Work in Process in Finishing during the period. g. completed in Finishing during the period.

Stangol Co. uses process costing to account for the production of highlighter pens. Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Cost per equivalent unit has been calculated to be $8.80 for conversion costs and $7.1667 for materials. 12,000 units were worked on during the period. Ending inventory still in process was 4,000 units (100% complete for materials, 50% for conversion) . The value of ending inventory using the weighted average method would be closest to:

Physical units multiplied by the percentage of completion yields:

At its highest level, the production report provides what?

Heathcoat Co. uses process costing to account for the production of canned vegetables. Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Beginning inventory consisted of $7,000 in materials and $4,000 in conversion costs. April costs were $36,000 for materials and $40,000 for conversion costs. On April 1, there were 2,000 units in beginning inventory (80% complete) . During April 10,000 units were completed. Ending in process inventory was 4,000 units (100% complete for materials, 40% for conversion) . The cost per equivalent unit for conversion costs using the FIFO method would be:

Harlow Corp. uses a FIFO process costing system. Beginning inventory for January consisted of 1,000 units that were 60% completed. During January, 9,500 units were started and completed. On January 31, the inventory consisted of 500 units that were 70% completed. How many units were started during January?

Cost per equivalent unit is calculated separately for direct materials and for conversion costs

Sanger Corp. uses a process costing system in which direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Beginning inventory for January consisted of 1,000 units that were 40% completed. 10,000 units were started into the process during January. On January 31, the inventory consisted of 500 units that were 70% completed. What would be the equivalent units for direct materials cost using the FIFO method?

The process costing production report can be prepared using either the weighted-average method or the last-in, first-out (LIFO) method

TryFit Co. uses process costing to account for the production of energy food bars. Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Beginning inventory consisted of $7,000 in materials and $4,000 in conversion costs. April costs were $36,000 for materials and $40,000 for conversion costs. During April 8,000 units were completed. Ending in process inventory was 4,000 units (100% complete for materials, 50% for conversion) . The value of ending inventory using the weighted average method would be closest to:

A separate Work in Process Inventory account is used in process costing for each major production process

Swan Corp. began work on 3,000 units this period. Work in Process Inventory was 500 at the beginning of the period (60% complete) and 1,000 at the end of the period (50% complete). Beginning inventory costs were $3,000 for conversion costs and $7,000 for direct materials. During the period, Swan incurred $75,000 for conversion costs and $52,500 for direct materials. Swan uses the weighted average method of process costing. Direct materials are added at the beginning of the process, and conversion costs are incurred evenly throughout the period. Required: Using the weighted average method: a. How many units were completed during the period? b. Determine the number of equivalent units for direct materials. c. Determine the number of equivalent units for conversion costs. d. Calculate the cost per equivalent unit for direct materials. e. Determine the cost per equivalent unit for conversion costs.

Middle Co. uses process costing to account for the production of chocolate candy bars. Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Cost per equivalent unit has been calculated to be $4.00 for conversion costs and $3.00 for materials. 3,000 units were in beginning inventory (100% complete for materials, 80% for conversion) . 12,000 units were started and completed during the period. Ending inventory still in process was 6,000 units (100% complete for materials, 40% for conversion) . The value of ending inventory using the FIFO method would be: