Module 2

Costs are transferred, along with the units, from one work in process inventory account to the next in a process costing system.

true

Multiple production department factory overhead rates are most useful when production departments significantly differ in their manufacturing processes.

true

One of the differences in accounting for a process costing system compared to a job order system is that the amounts used to transfer goods from one department to the next comes from the cost of production report instead of job cost cards.

true

The direct labor costs and factory overhead costs incurred by a production department are referred to as conversion costs.

true

The portion of whole units that were completed with respect to either materials or conversion costs within a given accounting period is the definition of

b. equivalent units

The cost of direct materials transferred into the Filling Department of Lilac Skin Care Company is $20,250. The conversion cost for the period in the Filling Department is $6,372. The total equivalent units for direct materials and conversion are 45,000 ounces and 42,480 ounces, respectively. Determine the conversion cost per equivalent unit.

c. $0.15

Based on the table, and using the direct method, what percent of Support Department 2 costs will be allocated to Production Department 2?

c. 10%

The entry to record the flow of direct labor costs into production in a job order cost accounting system is to

c. debit Work in Process, credit Wages Payable

Which types of inventories does a manufacturing business report on the balance sheet?

c. direct materials inventory, work in process inventory, and finished goods inventory

Panamint Systems Corporation is estimating activity costs associated with producing disk drives, tapes drives, and wire drives. The indirect labor can be traced to four separate activity pools. The budgeted activity cost and activity base data by product are provided below. Determine the activity rate for product development per change.

d. $16,222

Reynolds Manufacturers Inc. has estimated total factory overhead costs of $95,000 and expected direct labor hours of 9,500 for the current fiscal year. If job number 117 incurs 2,300 direct labor hours, Work in Process will be debited and Factory Overhead will be credited for

d. $23,000

The cost of direct materials transferred into the Filing Department of Lilac Skin Care Company is $20,250. The conversion cost for the period in the Filing Department is $6,372. The total equivalent units for direct materials and conversion are 45,000 ounces and 42,480 ounces, respectively. Determine the conversion costs per equivalent unit.

d. $0.15

When Job 117 was completed, direct materials totaled $4,400; direct labor, $5,600; and factory overhead, $2,400. A total of 1,000 units were produced at a per-unit cost of

d. $12.40

In the manufacture of 8,000 units of a product, direct materials cost incurred was $154,600, direct labor cost incurred was $84,000, and applied factory overhead was $45,500. What is the total conversion cost?

a. $129,500

The Roget Factory has determined that its budgeted factory overhead budget for the year is $15,500,000. They plan to produce 2,000,000 units. Budgeted direct labor hours are 1,050,000 and budgeted machine hours are 750,000. Using the single plantwide factory overhead rate based on direct labor hours, calculate the factory overhead rate for the year.

a. $14.76

The Skagit Company manufactures Hooks and Nooks. The following shows the activities per product and total activity information: Calculate the total factory overhead to be charged to each unit of Hooks.

a. $33

There were 2,000 pounds in process at the beginning of the period in the Packing Department. Packing received 24,000 pounds from the Blending Department during the month, of which 3,000 pounds were in process at the end of the month. How many pounds were completed and transferred to finished goods from the Packing Department?

a. 23,000

Activity-based costing for selling and administrative expenses can also be beneficial in allocating expenses to various products. Which of the following is the best allocation base for help desk costs?

a. Number of calls

Which of the following is the correct flow of manufacturing costs?

a. raw materials, work in process, finished goods, cost of goods sold

Conversion costs include materials, direct labor, and factory overhead.

false

If a company uses a process costing system to account for the costs in its five production departments, how many work in process accounts will it use?

b. 5

Three products result from a joint production process. There are 50 units of product B158, 100 units of product B159, and 50 units of product B160. Using the physical units, method, what percent of the joint costs will be allocated to product B159?

b. 50%

The amount of time spent by an employee in the factory is usually recorded on

a. time tickets

Aspen Technologies has the following budget data: If factory overhead is to be applied based on direct labor hours, the predetermined overhead rate is

b. $13.20

Blue Ridge Marketing Inc. manufactures two products, A and B. Presently, the company uses a single plantwide factory overhead rate for allocating overhead to products. However, management is considering moving to a multiple department rate system for allocating overhead. The following table presents information about estimated overhead and direct labor hours. Determine the overhead from both production departments allocated to each unit of Product A if Blue Ridge Marketing Inc. uses a multiple department rate system.

b. $425.60 per unit

Which of the following are the two most common allocation bases for factory overhead?

b. Direct labor hours and machine hours

In process cost accounting, the costs of direct materials and direct labor are charged directly to

b. processing departments

The basis for recording direct and indirect labor costs incurred is a summary of the period's

b. time tickets

Which of the following costs incurred by a tool manufacturer would not be included in conversion costs?

c. raw steel

All of the following are characteristics of a process cost system except

c. the system accumulates costs per job

Which of the following is not a characteristic of a process cost system?

c. the system measures costs for each completed job

Given the following information, determine the activity rate for setups.

b. $18.00

The Dawson Company manufactures small lamps and desk lamps. The following shows the activities per product and the total overhead information: Calculate the total factory overhead to be charged to desk lamps.

b. $235,000

Adams Company is a manufacturing company that has worked on several production jobs during the first quarter of the year. Below is a list of all the jobs for the quarter: What is the ending balance of Work in Process for Adams Company at the end of the first quarter?

b. $456

The Beauty Beyond Words Salon uses an activity-based costing system in its beauty salon to determine the cost of services. The salon has determined the costs of services by activity as follows: Calculate the cost of services for a haircut.

b. $7.50