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Exam 20: Process Cost Accounting

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Question 1

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Equivalent units of production is an engineering term used to describe the process by which one company attempts to manufacture units of a product that are equivalent to the product manufactured by a competitor.

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B) False

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The following data is available for Osman Corp. for the current year: Calculate the equivalent units of production for the year using the weighted average method.

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Why is the Process Cost Summary important to management and how does the Process Cost Summary accomplish its purposes?

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

Prepare the required general journal entry to record the following transactions for the Flaherty Company. a. Incurred $95,000 of factory labor cost which is paid in cash. b. Used $78,000 of direct labor in the production department. c. Used $17,000 of indirect labor.

A production department's output for the most recent month consisted of 10,000 units completed and transferred to the next stage of production and 10,000 units in ending goods in process inventory. The units in ending goods in process inventory were 50% complete with respect to both direct materials and conversion costs. There were 1,000 units in beginning goods in process inventory, and they were 70% complete with respect to both direct materials and conversion costs. Calculate the equivalent units of production for the month, assuming the company uses the weighted average method.

In a process cost accounting system, factory overhead costs can be allocated to production departments by using a predetermined overhead allocation rate.

The use of process costing is of little benefit to a service type of operation.

Which of the following characteristics applies to process cost accounting but not to job order cost accounting?

During March, the production department of a process manufacturing system completed a number of units of a product and transferred them to finished goods. Of the units transferred, 25,000 were in process at the beginning of March and 110,000 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.

Process and job order manufacturing operations both combine materials, labor, and overhead items in the process of producing products.

Medina Corp. uses the weighted average method for inventory costs and had the following information available for the year. Equivalent units of production for the year are:

What are the four steps in accounting for production activity in a period?

If Department Q uses $60,000 of direct materials and Department T uses $15,000 of direct materials, the following journal entry would be recorded by the process cost accounting system:

A process cost summary shows the cost of a particular job manufactured in the reporting period.

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

Heesacker, Inc. uses a process cost accounting system. The following operating and cost data occurred during October: Materials are added at the beginning of the process. Direct labor and overhead are incurred evenly throughout the process. Prepare the October process cost summary assuming the weighted average method of inventory costing.

Describe the flow of materials in a process cost accounting system, including accounts used.

A process cost summary is a managerial accounting report that describes:

If the predetermined overhead allocation rate is 225% of direct labor cost, and the Mixing Department's direct labor cost for the reporting period is $10,000, the following entry would be made to record the allocation of overhead to the products processed in this department: