ACCT101 - Ch.3
9) In a production cost report, the number of total units to account for consists of ________. The weighted-average method is used. A) units in process at the beginning of the period and units started or added during the period B) units in process at the beginning of the period and units remaining at the end of the period C) units in process at the end of the period and units started or added during the period D) units of completed and transferred out products and total units produced
A) units in process at the beginning of the period and units started or added during the period
Vaughn Company had the following department information for the month of September: Total materials costs, $60000; equivalent units of materials, 24000; total conversion costs, $33000; and equivalent units of conversion costs, 10000. What is the total manufacturing cost per unit for the month of September? $5.80. $1.38. $2.74. $3.30.
$5.80 Unit materials cost ($2.50) = total materials cost ($60000) ÷ equivalent units of materials (24000). Unit conversion cost ($3.30) = total conversion costs ($33000) ÷ equivalent units of conversion costs (10000). Total manufacturing cost per unit ($5.80) = Unit materials cost ($2.50) + unit conversion cost ($3.30)
Total Units Accounted For Equation
(Beg. WIP units + Units started into production = Units to acct. for)
END WIP =
(Materials x Unit Cost) + (CC x Unit Cost)
Transferred Out
(Units transferred out x (DM cost/unit + CC/unit) = Transferred out costs)
Materials are added at the beginning of the process. Conversion costs are added evenly throughout the process. The incomplete units are 30% completed as to conversion costs. What is the total number of equivalent units for conversion costs during April using the weighted-average method? 74,400. 24,000. 83,000. 21,600.
74,400. Units transferred out plus (72,000) equivalent units for ending work in process (2,400) = the total number of equivalent units (74,400) for conversion costs.
In March, Kelly Company had the following unit production costs: materials $10 and conversion costs $8. On March 1, it had no work in process. During March, Kelly transferred out 28,500 units. As of March 31, 4,400 units that were 39% complete as to conversion costs and 100% complete as to materials were in ending work in process. Total Units Accounted For? Equivalent Units of Production?
0 (Work in process, March 1) + 32,900 *(Started into production) = 32,900*28,500 + 4,400 = 32,900(0 + (28,500 + 4,400) = 32,900) Materials: Units transferred out (28,500) + WIP March 31 (4,400) = 32,900 CC: (28,500) + WIP (4,400 x 39% = 1,716) = 30,216
The Mixing Department's output during the period consists of 19700 units completed and transferred out, and 4600 units in ending work in process 60% complete as to materials and conversion costs. Beginning inventory is 900 units, 40% complete as to materials and conversion costs. Assuming the weighted-average method, the equivalent units of production are 22460. 22100. 24300. 23360.
22460.
7) Alchemy Manufacturing produces a pesticide chemical and uses process costing. There are three 7) processing departmentsMixing, Refining, and Packaging. On January 1, the first department Mixinghad no beginning inventory. During January, 56,000 fl. oz. of chemicals were started in production. Of these, 30,000 fl. oz. were completed and 26,000 fl. oz. remained in process. In the Mixing Department, all direct materials are added at the beginning of the production process, and conversion costs are applied evenly throughout the process. The weighted-average method is used. At the end of the month, Alchemy calculated equivalent units. The ending inventory in the Mixing Department was 75% complete with respect to conversion costs. With respect to direct materials, what is the number of equivalent units in the ending inventory? A) 56,000 equivalent units B) 26,000 equivalent units C) 19,500 equivalent units D) 30,000 equivalent units
B) 26,000 equivalent units
1) Which of the following statements is true of process costing? A) It assigns manufacturing overhead costs to products only in the last production process. B) It accumulates product costs by production departments. C) It uses one Work-in-Process Inventory account.D) It tracks and assigns both period costs and product costs to units produced.
B) It accumulates product costs by production departments.
6) If 34,000 units are 80% complete with respect to direct materials, then the equivalent units of production for direct materials are ________. The weighted-average method is used. A) 6800 units B) 40,800 units C) 27,200 units D) 34,000 units
C) 27,200 units
5) The Refining Department of SweetBeet, Inc. had 79,000 tons of sugar to account for in July. Of the 5) 79,000 tons, 49,000 tons were completed and transferred to the Boiling Department, and theremaining 30,000 tons were 50% complete. The materials required for production are added at the beginning of the process. Conversion costs are added evenly throughout the refining process. The weighted-average method is used. Calculate the total equivalent units of production for direct materials. A) 15,000 units B) 49,000 units C) 79,000 units D) 64,000 units
C) 79,000 units
2) Under process costing, the costs incurred by each department are reported in ________. The perpetual inventory system is used. A) the Finished Goods Inventory account C) a production cost report B) a job cost sheetD) the Cost of Goods Sold account
C) a production cost report
8) Which of the following is a step in the preparation of a production cost report? A) computation of amount of materials required for production B) computation of expected units of production C) assignment of costs to units completed and units in process D) summarization of the flow of physical units to the suppliers
C) assignment of costs to units completed and units in process
4) Singh Enterprises manufactures picture frames. Its production operations are divided into two departments Assembly and Finishing. The company uses a process costing system. Singhincurred the following costs during the year to produce 6000 picture frames: If Singh can only sell 5100 picture frames during the year, what will be the cost per unit of the picture frames produced? (Round your answer to the nearest cent.) A) $1.90 B) $2.34 C) $1.62 D) $1.99
D) $1.99
10) Which of the following formulas is used to calculate the cost per equivalent unit of production (EUP) for direct materials? The weighted-average method is used. A) Cost per EUP for direct materials = Total direct materials costs / Equivalent units of production for conversion costs B) Cost per EUP for direct materials = Total conversion costs / Equivalent units of production for direct materials C) Cost per EUP for direct materials = Total transferred in costs / Equivalent units for transferred in D) Cost per EUP for direct materials = Total direct materials costs / Equivalent units of production for direct materials
D) Cost per EUP for direct materials = Total direct materials costs / Equivalent units of production for direct materials
3) Both job order costing and process costing ________. A) treat all period costs as product costs B) maintain a single Work-in-Process Inventory account C) follow last-in, first-out method for inventory valuation D) have the same type of product costs
D) have the same type of product costs
End. WIP costs
End. WIP units x DM cost/unit) + ((End. WIP units x % complete) x CC/unit)) = End. WIP costs
A company has three processing departments and uses a process costing system. When the company assigns manufacturing overhead costs to production, which account is affected? Finished Goods Inventory is debited. Cost of Goods Sold is debited. The Work in Process account of the first department is credited. Manufacturing Overhead is credited.
Manufacturing Overhead is credited.
Process Cost System
Multiple WIP, Production Cost Reports, Total manufacturing costs / equivalent units produced during the period Primary driver = machine hours used
Materials are added at the beginning of the process. Conversion costs are added evenly throughout the process. The incomplete units are 40% completed as to conversion costs. What is the total number of equivalent units for materials during August using the weighted-average method? 69,000. 75,000. 71,400. 67,000.
Since 100% of materials is added at the beginning of process, total equivalent units for materials = 69,000 +6,000 = 75,000.
AVG UNIT COST =
TOTAL COST/TOTAL UNITS = AVG COST/UNIT
Which of the following items is not a characteristic of a process cost system? The focus is on continually producing homogeneous products. The products produced are heterogeneous in nature. When the finished product emerges, all units have precisely the same amount of materials, labor, and overhead. Once production begins, it continues until the finished product emerges.
The products produced are heterogeneous in nature.
Manufacturing Process
The transformation of raw material into finished goods through one or more of the following: Casting and Molding, Shaping and Reshaping for forming, Shearing, Pulverizing, Machining, for material removal, or Joining by transforming using heat or chemical reaction to bond materials. DR WIP CR FG
In Mordica Company, total materials costs are $36,000, and total conversion costs are $57,480. Equivalent units of production are materials 10,000 and conversion costs 12,000. Materials cost per unit Conversion cost per unit
Total materials costs 36,000 /Equivalent unitsof materials 10,000 = Unit materials cost $3.6 Total conversion costs 57,480 ÷ Equivalent units of conversion costs 12,000 = Unit conversion cost $4.79
Total Costs
Transferred out costs + End. WIP costs = Tot. costs)]
Costs accounted for
Transferred out x Total Unit Cost
calculate equivalent units of production
Units completed & transferred out + equivalent units of ending WIP
Transfer(assign) from WIP to FG
Units completed x average cost
Transfer(assign) from FG to COGS
Units sold x average cost
Method to calculate unit cost
Weighted-Average Method = sum of total cost/sum of total units
Marco Company has two processing departments and uses a process costing system. Which account is debited when the company assigns factory labor costs to production? Factory Labor is debited. Cost of Goods Sold is debited. Work in Process is debited. Manufacturing Overhead is debited.
Work in Process is debited.
A process cost system would be used by all of the following except a(n) chemical company. oil company. advertising company. computer chip company.
advertising company.
Job order Cost System
assigns only 1 WIP, job cost sheets, Cost of each job / units produced for job
The total costs accounted for in a production cost report are equal to the cost of units completed and transferred out. cost of beginning work in process plus the cost of units completed and transferred out. cost of units started into production.
cost of units completed and transferred out plus the cost of ending work in process.
In a process cost system, manufacturing overhead is assigned to a work in process account for each production department as overhead costs are incurred. is assigned to a work in process account for each production department on the basis of a predetermined overhead rate. is assigned to a work in process account for each job as the job is completed. is assigned to finished goods at the end of each accounting period.
is assigned to a work in process account for each production department on the basis of a predetermined overhead rate.
Conversion costs are the sum of direct material costs and overhead costs. fixed and variable overhead costs. labor costs and overhead costs. direct labor and indirect labor costs.
labor costs and overhead costs.
Unit Cost
number of complete physical units to which units in inventories are equal in terms of work done to date in that month. Unit Cost = total manufacturing costs / total # of units
4 steps to prepare a production cost system
•Compute the physical unit flow Beginning WIP + Current Production = Transferred Out + Ending WIP •Compute the equivalent units of production. •Compute unit production costs. Prepare a cost reconciliation schedule
