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Exam 16: Process Costing and Analysis

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Question 101

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The purchase of raw materials on account in a process costing system is recorded with a:

A) Debit to Purchases and credit to Cash.
B) Debit to Purchases and a credit to Accounts Payable.
C) Debit to Raw Materials Inventory and a credit to Accounts Payable.
D) Debit to Accounts Payable and a credit to Raw Materials Inventory.
E) Debit to Work in Process Inventory and a credit to Accounts Payable.

F) B) and C)
G) B) and E)

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Question 102

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A company uses the weighted average method for inventory costing.During a period,Department B finished and transferred 50,000 units to Department C.Also in Department B during the period,10,000 units were started but brought only to a stage of being 60% completed.The number of equivalent units produced by Department B during the period was:

A) 44,000 units.
B) 50,000 units.
C) 54,000 units.
D) 56,000 units.
E) 60,000 units.

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

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Question 103

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

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 conversion costs; 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 direct materials and conversion respectively for May.

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 company uses the weighted average method for inventory costing.At the beginning of a period the production department had 20,000 units in beginning Work in Process inventory which were 40% complete; the department completed and transferred 165,000 units.At the end of the period,22,000 units were in the ending Work in Process inventory and are 75% complete.Compute the number of equivalent units produced by the department.

Since the process cost summary describes the activities of a production department for a specified reporting period,it does not present information about any costs incurred in prior periods.

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

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

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 materials.

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.

A process cost summary usually does not include the number of equivalent units of production for the period.

During November,the production department of a process operations system completed and transferred to finished goods 35,000 units that were in process at the beginning of November and 110,000 that were started and completed in November.November's beginning inventory units were 100% complete with respect to materials and 55% complete with respect to conversion.At the end of November,40,000 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 conversion for November using the weighted-average method.

Which of the following characteristics does not usually apply to process operations?

Refer to the following information about the Shaping Department of the Minnesota Factory for the month of August.Minnesota Factory uses the FIFO 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 ending Work in Process inventory for August.

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

If the predetermined overhead allocation rate is 75% of direct labor cost,and the Assembly Department's direct labor cost for the reporting period is $20,000,the following entry would be made to record the allocation of overhead to the products processed in this department:

The process cost summary is an important managerial accounting report prepared for each process or production department.

A process costing system records all factory overhead costs incurred directly in the Work in Process Inventory accounts.

In a process costing system,direct materials used are debited to the ________ account,and indirect materials used are debited to the ________ account.