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Exam 18: Costing Systems- Process Costing

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Question 71

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If 45,000 units of ending work in process inventory are 60 percent complete as to conversion costs,27,000 equivalent units of conversion costs must be incurred to complete these units during the next period.

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Question 72

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Average costing method treats the ending inventory exactly in the same way as the FIFO costing method.

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Question 73

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Which of the following items most likely would be manufactured using a process costing system?

Which method assumes that all units in beginning work in process (WIP) are completed in the current period?

One reason for preparing a process cost report for a particular department is to determine the amount of costs to transfer to the next department or to the Finished Goods Inventory account at the end of the period.

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 FIFO costing method.The following data are available for one of its accounting periods: $\begin{array} { | l cl| } \hline & \text { Units } \\\text { Beginning work in process } & 26,000& \text { (70 percent complete for conversion costs) } \\\text { Units started } & 180,000 \\\text { Units transferred out } & 191,000 \\\text { Ending work in process } & 15,000 &\text { (60 percent complete for conversion costs) } \\\hline\end{array}$ Assume that you have calculated a direct materials cost per unit of $4 and a conversion cost per unit of $7.Under this assumption,the ending balance for Work in Process Inventory would be

The following unit data were assembled for the heating process of Morgan Processing,Inc.,for the month of August.Direct materials are added at the beginning of the process.Conversion costs are added uniformly over the production process.The company uses the FIFO process costing method. $\begin{array}{lr}&\text { Units }\\\text { Beginning work in process inventory }\\\text { (30 percent complete) } & 5,000 \\\text { Units started in August } & 44,000 \\\text { Ending work in process } & \\\text { (60 percent complete) } & 4,500\end{array}$ The number of equivalent units produced with respect to direct materials costs is

Measures of equivalent production are necessary in process costing because

Which of the following is not included in conversion costs?

Direct materials for 6,800 units were added at the beginning of the second process during November.During the month,7,100 units were completed and transferred to the third process.On November 1,there were 600 units in beginning inventory,and on November 30,there were 300 units still remaining in the process.Compute the equivalent units for direct materials for the second process for November using the FIFO costing method.