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Exam 18: Costing Systems- Process Costing

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Question 61

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Information for the current month for Process 5 is shown below. $\begin{array}{lrr}&\text { Direct Materials}&\text { Conversion Cost }\\\text { Beginning work in process } & \$ 4,600 & \$ 2,060 \\\text { Current month's costs } & 46,400 & 42,375 \\\text { Equivalent units based on the FIFO costing } & 58,000 & 56,500 \\\text { method } & &\end{array}$ Units completed $-55,000$ Units in ending work in process-5,000 Direct materials are added at the beginning of the process.Beginning work in process is 40 percent complete as to conversion costs; ending work in process inventory is 60 percent complete.The cost of ending work in process inventory totaled

A) $7,750.
B) $4,650.
C) $5,500.
D) $6,250.

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

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Question 62

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Regardless of beginning inventory levels,the unit costs are determined by dividing the equivalent units by the total costs of the period.

A) True
B) False

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Question 63

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A process costing system is used by companies that manufacture large amounts of similar products or liquid products.

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.

Data for Orlando Company for the month of June 20xx are as follows: $\begin{array}{ll}\text { Beginning work in process inventory: } & \text { Operations for the month of June: } \\\text { Units - } 800 & \text { Units started-14,000 } \\\text { Direct materials - } 100 \% \text { complete } & \text { Direct materials costs- } \$ 57,400 \\\text { Conversion costs- } 70 \% \text { complete } & \text { Conversion costs- } \$ 50,122\\\text { Direct materials costs -\$ 2,860 }\\\text { Conversion costs- \( \$ 2,150 \)}\\\text { Ending work in process inventory:}\\\text { Units - 1500}\\\text {Direct materials \( -100 \% \) complete }\\\text {Conversion costs- \( 30 \% \) complete}\\\end{array}$ Assume the company uses a FIFO flow of costs. a. Prepare a process cost report for July. b. Identify the amount that should be transferred out of the Work in Process Inventory account, and state where those dollars should be transferred. $\$ 2,150$ }\\ \text { Ending work in process inventory:}\\ \text { Units - 1500}\\ \text {Direct materials $-100 \%$ complete }\\ \text {Conversion costs- $30 \%$ complete}\\ \end{array} Assume the company uses a FIFO flow of costs. a. Prepare a process cost report for July. b. Identify the amount that should be transferred out of the Work in Process Inventory account, and state where those dollars should be transferred. " class="answers-bank-image d-inline" rel="preload" >

In a process costing system,all production costs are assigned to departments.

Trunkey Products,Inc.,uses a process costing system and has just completed production for the month of November 20xx.The following production data were obtained from the accounting records: a. Units in beginning inventory totaled 6,800 and were 30 percent complete as of November 1 (all direct materials were added to these products in the preceding month). b. During the period, 156,200 units were started. c. 19,200 units were partially completed as of November 30, 20xx. d. Ending work in process inventory was 40 percent complete at month end. From the data given, compute the equivalent units of production for direct materials and conversion costs for the month ended November 30, 20xx, assuming the company follows average costing method.

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

D.Q.Company uses the FIFO method in its process costing system.Beginning inventory in the mixing department consisted of 6,000 units that were 75 percent complete with respect to conversion costs.Ending work in process inventory consisted of 5,000 units that were 60 percent complete with respect to conversion costs.If 12,000 units were transferred to the next processing department during the period,the equivalent units for conversion costs would be

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: $\begin{array} { l l } &\text { Units }\\\text { Beginning work in process }&\text { 26,000 (70 percent complete for conversion }\\& \text { costs) } \\ \text { Units started } & 180,000 \\ \text { Units transferred out } & 191,000 \\ \text { Ending work in process } & 15,000 \text { (60 percent complete far conversion } \\ & \text { costs) } \end{array}$ Equivalent units for direct materials are

In a process costing system,the amount of total costs to be accounted for is made up of direct materials and conversion costs incurred during the current period plus those costs included in the beginning Work in Process Inventory account.

Why are equivalent units of production used in process costing?

During March,Department A started 300,000 units of product in a particular production process.The beginning work in process inventory was 50,000 units,and the ending inventory was 40,000 units.Direct materials are introduced at the start of processing,and beginning and ending inventories are considered to be 40 percent complete with respect to conversion costs.Department A uses the FIFO costing method. The number of units started and completed during March was

Because process costing is normally associated with a continuous production flow,products that are in process at the beginning of the period are assumed to be the first completed during the current period.

The equivalent units of production must be computed before the value of ending inventory can be determined in a process costing system.

The following data were taken from the accounting records of a company that uses the FIFO method in its process costing system: Beginning work in process inventory: 20,000 units (materials 100% complete,conversion costs 60% complete) Started in process during the period: 80,000 units Ending work in process inventory: 30,000 units (materials 100% complete,conversion Costs 70% complete) The equivalent units are

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 equivalent units of production for direct materials and conversion costs,respectively,were

In a process costing system,products flow in a LIFO manner,from department to department.

The FIFO costing method is a costing method in which the cost flow follows the logical product flow.

If a company uses a process costing system to account for costs in its four production departments,how many Work in Process accounts will it use?