2071 chap 3

Reconciling the total cost of Work in Process Inventory is the ______ step in preparing a production report using the weighted-average method.

fourth

The key difference between the weighted-average method and the FIFO method is how they deal with units and costs ______.

in beginning Work in Process Inventory

Gross profit, as calculated based on journal entries, ______.

is unadjusted because it is based on applied, not actual, overhead

When using process costing, costs are accumulated by ______.

major process

A journal entry debiting Work in Process Inventory and crediting Raw Materials Inventory records ______.

placing materials into production

The foundation of a process costing system is the______.

production report

The production report ______.

provides information to record manufacturing costs in the accounting system

After journal entries have been posted, the calculated gross profit is ______.

unadjusted because it is based on applied manufacturing overhead

What is the formula for the cost per equivalent unit using the weighted-average method?

(Beginning Inventory + Current Costs)/Equivalent Units

Select all that apply Equivalent units of production are needed to ______.

-determine the cost of partially completed units -properly prepare GAAP-based financial statements

Given 100 units in beginning inventory, 1,500 units started, and 200 units in ending inventory, the number of units completed equals ______.

1,400 Reason: 100 + 1,500 - 200 = 1,400

Using the weighted-average method, if work in process inventory has 100 units that are 40% complete and 300 units were transferred to the next department during the period, there are a total of equivalent units of-- production. (Enter your answer as a whole number.)

340

True or false: Process costing can only be used by manufacturing firms.

False Reason: While process costing is most often identified with manufacturing, it may also be used in service firms that perform routine processes.

Cost of goods completed is transferred from Work in Process Inventory to ______.

Finished Goods Inventory

How are manufacturing overhead costs distributed in each process?

The costs are distributed based on a predetermined overhead rate.

True or false: The equivalent units of production computed under the weighted-average method does not take into account the percentage completed of the beginning inventory.

True Reason: The equivalent units already include work accomplished in prior periods.

When goods are sold, ______.

a journal entry to record the sale and a journal entry to record the cost of goods sold must be made

When using process costing, ______.

a separate production report is prepared for each process

A production report presents ______.

both costs to be accounted for and costs accounted for.

A production report includes ______.

both unit and cost information

Issuing raw materials into production requires a ______ to the Raw Materials account.

credit

When using process costing, major material inputs used in production that can be traced to the product are______.

direct materials

Once production is completed, total manufacturing costs are transferred to ______.

Finished Goods Inventory

The journal entry to record the transfer of completed units to finished goods is debit ______.

Finished Goods Inventory and credit Work in Process Inventory

To record the purchase of raw materials, debit ______.

Raw Materials Inventory and credit Accounts Payable

True or false: When using process costing, direct labor costs are often combined with manufacturing overhead into a single cost category.

True Reason: With process costing it is often not easy or worth the effort to trace direct labor to products, so direct labor may be combined with manufacturing overhead into a single category called conversion costs.

Equivalent units of production under the weighted-average method equal ______

equivalent units in ending work in process plus units transferred out

Which of the following is not a method that can be used to prepare process costing production reports?

last-in, first-out (LIFO)

The first step in preparing a weighted-average production report is ______.

reconcile the number of physical units

The difference between (units in beginning inventory + units started) and units completed is ______.

units in ending inventory

Recording the transfer of partially completed products from one processing department to another requires a debit and a credit to the ______ accounts of both of the processing departments.

Work in Process Inventory

Given the following, compute the conversion cost per equivalent unit using the weighted-average method. Conversion costs in beginning inventory $5,000. Conversion costs added in the current period $40,000. A total of 1,000 units were completed and transferred out during the period. The 500 units in ending inventory are 50% complete.

36 Reason: ($5,000 + $40,000) ÷ (1,000 + 500 × 50%) = $36

A company's beginning work in process contained 200 units that were 20% complete. Those units were completed and transferred to finished goods. During the period 4,300 units were started. Of the units started, 4,000 were transferred to finished goods. The 300 units in ending work in process were 30% complete. Using the weighted-average method, the equivalent units of production equals ______.

4290 Reason: Beginning WIP + started and completed = 4,200 units transferred out + 300 units in ending WIP x 30% complete = 4,290 equivalent units.

Which of the following statements is true regarding process costing?

A separate production report is prepared for each major process.

Select all that apply Which of the following statements are true?

-Costs that move from one process to another are called transferred-in costs. -Under the weighted-average method, beginning inventory costs are treated just like costs added during the current period.

Select all that apply Which of the following statements are true regarding process costing production reports?

-Managers can use production reports to monitor and control production costs. -Production reports are used to determine how much cost to transfer from one process to the next. -Production reports provide information accountants need to record manufacturing costs into the accounting system.

Select all that apply Conversion costs include ______

-direct labor -manufacturing overhead

Select all that apply Both process costing and job order costing assign ______ costs to products.

-direct materials -direct labor -manufacturing overhead

Select all that apply The total cost of Work in Process Inventory ______.

-includes beginning Work in Process plus current costs -is divided between ending inventory and costs transferred to the next process or Finished Goods

Select all that apply Cost transferred from Work in Process (WIP) Inventory to Finished Goods (FG) Inventory ______.

-may be called cost of goods completed -may be called cost of goods manufactured -remain in FG Inventory until goods are sold

Given $40,000 of current costs, $3,000 of costs in beginning inventory, and 500 equivalent units, the cost per equivalent unit using the weighted-average method is $--. (Enter a whole dollar amount with no decimal places.)

Blank 1: 86

When production is completed in the last processing department, the units are transferred---- to the Inventory account. (Enter only one word per blank.)

Blank 1: Finished Blank 2: Goods

To calculate cost per equivalent unit using the weighted-average method, add the cost of-- inventory to current costs and divide by-- units. (Enter only one word per blank.)

Blank 1: beginning Blank 2: equivalent

The journal entry to-- record labor costs for Process #1 is to Salaries or Wages Payable and-- Work in Process Inventory. (Enter either debit or credit.)

Blank 1: credit Blank 2: debit

The journal entry to record the transfer of completed units to finished goods is-- Finished Goods Inventory and-- Work in Process Inventory. (Enter either debit or credit.)

Blank 1: debit Blank 2: credit

The purchase of raw materials is recorded with a-- to Raw Materials Inventory and a-- to Accounts Payable. (Enter debit or credit.)

Blank 1: debit Blank 2: credit

For a juice maker, grapes would be considered a(n)---- . (Enter only one word per blank.)

Blank 1: direct Blank 2: material

In order to track the cost of partially completed units, they must be converted into a(n)-- number of fully completed units. (Enter only one word per blank.)

Blank 1: equivalent or equal

All costs other than direct materials and direct labor that are incurred to produce a product are called indirect costs or---- . (Enter only one word per blank.)

Blank 1: manufacturing Blank 2: overhead

For a toy maker, factory rent, utilities, and insurance are all part of---- . (Enter only one word per blank.)

Blank 1: manufacturing Blank 2: overhead

An equivalent unit is a measure used to convert-- completed units into the equivalent of a full unit. (Enter only one word per blank.)

Blank 1: partially, partly, or partial

The foundation of a process costing system is the-- report. (Enter only one word per blank.)

Blank 1: production

Costs that are moved from one production process to another are called-- --- costs. (Enter only one word per blank.)

Blank 1: transferred or transfer Blank 2: in

When customers purchase products, the manufacturing costs associated with the products are transferred to ______.

Cost of Goods Sold

When products are sold, manufacturing costs are transferred to ______.

Cost of Goods Sold

The entry to record the sale of finished goods to customers is to debit ______.

Cost of Goods Sold and credit Finished Goods Inventory

What is the journal entry to record the transfer of partially completed products from Processing Department #1 to Processing Department #2?

Debit Work in Process (Department #2) and credit Work in Process (Department #1).

What is the correct journal entry to apply manufacturing overhead costs to Processing Department #1?

Debit Work in Process Inventory (Dept. #1) and credit Manufacturing Overhead.

The journal entry to record direct labor costs into Processing Department #1 is to debit ______.

Work in Process Inventory (Dept. #1) and credit Salary or Wages Payable

Select all that apply Which of the following are similarities between job order costing and process costing?

-The flow of costs through the inventory accounts is basically the same for both costing systems. -The purpose is to assign direct materials, direct labor, and manufacturing overhead to products. -The same basic inventory accounts are used for both costing systems.