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Exam 18: Costing Systems- Process Costing

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Jackson Electronics,Inc.,manufactures a variety of microelectronic component parts and utilizes a process costing system.The following information was provided by the accounting department as of July 31,20xx: a. Units started during the month of July totaled 118,200. b. Units partially complete as of July 31 equaled 7,400. c. Ending work in process inventory as of July 31, 20x8, was 70 percent complete. d. Direct materials are added at the beginning of the process, and conversion costs are incurred uniformly throughout the process. e. No units were in process on July 1, 20xx. Using the information provided, compute the equivalent units of production for direct materials and conversion costs for July using the FIFO costing method.

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Average cost method assigns an average cost to all products made during an accounting period

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Average costing method disregards the previous period cost of units started last period.

The most commonly used method to assign costs to products in process costing is the FIFO costing method.

During October,Department A started 320,000 units of product in a particular manufacturing process.The beginning work in process inventory was 50,000 units,and the ending inventory was 30,000 units.Direct materials are introduced at the start of processing,and beginning and ending inventories are considered to be 50 percent complete with respect to conversion costs.Department A uses the FIFO costing method. The number of equivalent units for conversion costs was

The Bakersfield Company has the following information available: $\begin{array} { l r r | } & \text { Costs from Beginning } & \text { Costs from } \\& \text { Inventory } & \text { Current Period } \\\text { Direct materials } & \$ 3,650 & 31,620 \\\text { Conversion costs } & 9,120 & 143,100\end{array}$ At the beginning of the period,there were 800 units in process that were 60 percent complete as to conversion costs and 100 percent complete as to direct materials costs.During the current period,5,800 units were started and completed.Ending inventory contained 400 units that were 60 percent complete as to conversion costs and 100 percent complete as to direct materials costs.(Assume that the company uses the FIFO process costing method.) The cost of completing a unit during the current period was

Production processes that lend themselves to the use of process cost analysis usually have a FIFO product flow within the process.

In process costing system,the average costing method assumes that cost flows do follow the logical physical flow of production.

When the FIFO costing method is used in process costing,the number of units in beginning inventory is multiplied by 100 percent to determine the equivalent units.

One of the steps in preparing the process cost report under FIFO method requires dividing current costs charged to the Work in Process Inventory account of each department or production process by equivalent units to calculate the cost per equivalent unit.

Conversion costs are defined as the combined total of direct materials costs and direct labor costs incurred by a production department.

Use the following data from a company using a process costing system to answer the question(s) below. Beginning Work in Process Inventory on June 1 : 1,000 units - 100 percent complete as to direct materials 80 percent complete as to conversion costs Units Started During June: 6,500 units Ending Work in Pracess Inventory on June 30: 1,200 units - 100 percent complete as to direct materials 40 percent complete as to conversion costs The FIFO process costing method is used by the company. Equivalent units for conversion costs during the month totaled

When computing the cost per equivalent unit,the FIFO process costing method considers

Which of the following entities probably would use a process costing system?

The Taylor Company uses a process costing system.Assume that direct materials are added at the beginning of the period and that direct labor and overhead are added continuously throughout the process.The company uses the average costing method.The following data are available for one of its accounting periods: $\begin{array} { l l } &\text { Units }\\\text { Beginning work in process }&\text { 26,000 (70 percent complete for conversion }\\& \text { costs) } \\ \text { Units started } & 180,000 \\ \text { Units transferred out } & 191,000 \\ \text { Ending work in process } & 15,000 \text { (60 percent complete far conversion } \\ & \text { costs) } \end{array}$ Assume that you have calculated a direct materials cost per unit of $5 and a conversion cost per unit of $8.Under this assumption,the ending balance for Work in Process Inventory would be

Which of the following is not included in conversion costs?

Regardless of the cost approach used,in a process costing system,costs attached to units in beginning inventory are included in the computation of costs per equivalent unit.

Equivalent units of production usually are determined for

Use the following data from a company using a process costing system to answer the question below. Beginning Work in Process Inventory on June 1 : 1,000 units - 100 percent complete as to direct materials 80 percent complete as to conversion costs conversion costs Units Started During June: 6,400 units Ending Work in Pracess Inventory on June 30: 1,200 units - 100 percent complete as to direct materials 40 percent complete as to conversion costs The company uses average process costing method. Equivalent units for direct materials during the month totaled

Susan's Plastics,Inc.,manufactures a line of office desk accessories.The company's newest and most popular product is a plastic paper holder for holding the paper up while working at the computer.Production began on February 1,20xx.Plastic is poured into molds to form the product,and the entire process takes place in the Molding Department.After the liquid plastic is poured (signifying the beginning of the process),the molds must be cooled slowly before the paper holder is separated from the mold.Statistics for 20xx are shown below. $\begin{array}{lr}\text { Beginning inventory } & 0 \\\text { Units started } & 77,000 \\\text { Costs: Direct materials costs } & \$ 246,400 \\\quad \text { Conversion costs } & \$ 334.840\\\text {Units completed and transferred to the }\\\text {Packaging Department}&72,500\end{array}$ Ending work in process inventory: All direct materials were added at the beginning of the process,and the average stage of completion of these units as to conversion costs is 80 percent. No units were lost or spoiled during the year. a. a. Prepare a process cost report using the FIFO costing method for the Molding Department using five steps. Include T accounts to recap both costs and units for the Work in Process Inventory account. b. Identify the amount to be transferred out of Work in Process Inventory and prepare the necessary entry in journal form to do so. b. Transfer $_________ to __________ and prepare the necessary journal entry in good form to make the transfer.