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Exam 3: Process Costing and Analysis

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Question 31

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Richards Corporation uses the FIFO 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 cost per equivalent unit of conversion.

A) $2.76
B) $3.15
C) $2.90
D) $3.68
E) $3.00

F) A) and B)
G) None of the above

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Question 32

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

A) True
B) False

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Question 33

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When raw materials are purchased on account for use in a process costing system, the corresponding journal entry that should be recorded will include:

Prepare journal entries to record the following production activities for Oaks Manufacturing. a. Incurred overhead costs of $79,000 (paid in cash). b. Applied overhead at 110% of direct labor costs which are $93,900. c. Transferred completed products with a cost of $258,200 to finished goods inventory. d. Sold $602,000 of product on credit. Cost is $271,000.

Metaline Corp. uses the weighted average method for inventory costs and had the following information available for the year. The number of units transferred to finished goods during the year is:

At the beginning of the month, the Painting Department of Skye Manufacturing had 20,000 units in inventory, 70% complete as to materials, and 20% complete as to conversion. The cost of the beginning inventory, $28,650, consisted of $22,400 of material costs and $6,250 of conversion costs. During the month the department started 115,000 units and transferred 120,000 units to the next manufacturing department. Costs added in the current month consisted of $229,600 of materials costs and $540,500 of conversion costs. At the end of the month, the department had 15,000 units in inventory, 40% complete as to materials and 10% complete as to conversion. If Skye Manufacturing uses the weighted average method of process costing, compute the costs per equivalent unit of materials and conversion respectively for the Painting Department.

A company uses the FIFO method for inventory costing. At the start of the 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. The production department had labor costs in the beginning goods is process inventory of $99,000 and total labor costs added during the period are $726,825. Compute the equivalent cost per unit for labor.

On a process cost summary, the total costs to account for (the processing costs for the period plus the Work in Process at the end of the period) should equal ________ (________ plus ________).

In a manufacturing operation with two process departments (1 and 2), the flow of costs would proceed from Work in Process, Department #1 to ________.

Equivalent units of production for direct materials and direct labor are always the same.

The following journal entry would be made to record the use of $6,100 of direct labor in a production department during the reporting period:

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:

Process costing systems use a single Work in Process Inventory account regardless of the number of production departments that exist.

All of the following are true about using a predetermined overhead rate to apply overhead except,

The following data are available for a company's manufacturing activities: If materials are added when the production process begins and conversion costs are applied uniformly throughout the process, what are the equivalent units for direct materials and for conversion, respectively using the FIFO method of process costing?

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 company uses a process costing system and the weighted average method for inventory costs. The following information is available regarding direct labor for the current year: (a) Calculate the equivalent units of production for direct labor for the year. (b) Calculate the cost per equivalent unit for direct labor (round to the nearest cent).

Dazzle, Inc. produces beads for jewelry making use. The following information summarizes production operations for June. The journal entry to record June production activities for direct labor usage is:

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

A company's January 1 Work in Process inventory contained 30,000 units that were 25% complete with respect to direct labor. The beginning inventory was completed this year and another 120,000 units were started. Of those started, 80,000 were finished and the remaining 40,000 were 30% complete. Calculate the equivalent units of production for the year using the FIFO method.