ACTG 6100 exam 3_chapter 18

A company's process costing production report for a particular department reveals a beginning inventory of 3,000 units and new units started during the period totaling 82,000. The report shows that by the end of the period, 80,000 units had been transferred to the next department. How many units does the process costing production report show remaining in inventory at the end of the period?

5,000 units Reason: 3,000 + 82,000 - 80,000 = 5,000 units

A company's process costing production report for a particular department reveals 4,000 units of beginning inventory that were 30% complete with respect to conversion costs. The report also shows 60,000 units that were started and completed during the period, as well as 8,000 units in ending inventory that are 40% complete with respect to conversion costs. How many equivalent units of conversion resources does the report show were used during the period?

66,000 equivalent units *** Reason: (4,000 × 70%) + 60,000 + (8,000 × 40%) = 66,000 equivalent units

A company's process costing production report for a particular department reveals a beginning inventory of 3,000 units and new units started during the period totaling 82,000. The report shows that by the end of the period, 80,000 units had been transferred to the next department. How many units does the process costing production report show as being started and completed during the current period?

77,000 units *** Reason: 80,000 units transferred less the 3,000 units in beginning inventory = 77,000 units

True or false: When direct labor and direct materials costs are incurred uniformly at the same rate in a process costing system, they often are combined and referred to as conversion costs.

False *** Reason: Direct labor and overhead costs are often combined and referred to as conversion costs.

Which of the following is/are needed in order to determine the flow of physical goods through a production department within a process costing system?

The ending work in process of the department. The number of units transferred out of the department during the period. The beginning work in process of the department. The number of units started in the department during the period.

Which of the following types of businesses would be most likely to use a process costing system?

a dog food manufacturer

Which of the following businesses would be most likely to use a process costing system?

a soft drink company an automobile manufacturer a candy bar company

Process costing systems are used to

compute a company's cost of goods sold reported in its income statement. value a company's inventory reported in its balance sheet. measure a company's cost of goods manufactured.

When direct labor and overhead costs are incurred uniformly at the same rate in a process costing system, they often are combined and referred to as

conversion costs

When evaluating the efficiency of a particular process costing department, management considers the

conversion costs incurred by that department. direct materials costs incurred by that department.

Process costing and job order costing are two examples of

cost accounting systems

Process costing production reports reveal specific information about a department's

costs per equivalent unit of materials and conversion during the period. physical flow of goods during the period. equivalent units of resource inputs during the period.

When transferring costs from one production department to another, the Work in Process account of the receiving department is ____ and the Work in Process account of the transferring department is ____.

debited credited

When ____ ____ and manufacturing _____ costs are incurred uniformly at the same rate in a process costing system, they often are combined and referred to as conversion costs.

direct labor overhead

n a process costing system, conversion costs are composed of _____ ____ and ____ costs.

direct labor overhead

Companies that engage in mass production typically use ____ costing rather than ____ ____ costing systems

process job order

Companies that mass produce identical products are most likely to use ____ costing systems, whereas companies that provide unique products or services for their customers typically use ____ ____ costing systems

process job order

Process costing keeps separate ____ ____ ____ Inventory accounts to track the flow of physical goods and their related costs throughout all stages of production.

work in process

Which of the following statements is/are true regarding the recording of costs in a process costing system?

Journal entries to record direct materials used are recorded throughout the period. Journal entries to apply manufacturing overhead to production are usually recorded at the end of the period.

Thompson Manufacturing uses a process costing system with multiple production departments. At the start of the current period, $80,000 in costs had been carried forward and assigned to partially completed inventory in Department A. Resources totaling $72,000 were consumed in the current period to complete those units. An additional 17,000 units were started and completed during the current period at a cost of $18 per equivalent unit. The summary journal entry required to transfer completed units from Department A to Department B in the current period includes a

$458,000 credit to Work in Process: Department A. *** Reason: $80,000 + $72,000 + (17,000 units × $18) = $458,000 $458,000 debit to Work in Process: Department B. *** Reason: $80,000 + $72,000 + (17,000 units × $18) = $458,000

A company's process costing production report for a particular department reveals 4,000 units of beginning inventory that were 30% complete with respect to conversion costs. The report also shows 90,000 units that were started and completed during the period, as well as 8,000 units in ending inventory that are 40% complete with respect to conversion costs. If conversion costs for the period totaled $480,000, the process costing production report will reveal conversion costs of

$5.00 per equivalent unit *** Reason: $480,000/((4,000 × 70%) + 90,000 + (8,000 × 40%)) = $5 per equivalent unit

Montgomery Corporation uses a process costing system with multiple production departments. At the start of the current period, $100,000 in costs had been carried forward and assigned to partially completed inventory in Department A. Resources totaling $90,000 were consumed in the current period to complete those units. An additional 25,000 units were started and completed during the current period at a cost of $30 per equivalent unit. The summary journal entry required to transfer completed units from Department A to Department B in the current period includes a

$940,000 credit to Work in Process: Department A. *** Reason: $100,000 + $90,000 + (25,000 units × $30) = $940,000 $940,000 debit to Work in Process: Department B. *** Reason: $100,000 + $90,000 + (25,000 units × $30) = $940,000

In a process costing system, manufacturing costs flow in which of the following sequences?

(1) through multiple Work in Process Inventories; (2) to Finished Goods Inventory; and (3) to Cost of Goods Sold

Salter Enterprises uses a process costing system with multiple production departments. Its beginning inventory in Department A was carried forward at a total cost of $180,000, and it comprised 5,000 equivalent units of direct materials (carried forward at $80,000) and 4,000 equivalent units of conversion (carried forward at $100,000). During the current period, the company used 60,000 equivalent units of direct materials costing $960,000 and 50,000 equivalent units of conversion costing $1.25 million. In evaluating the efficiency in Department A, management may conclude the following about the cost per equivalent unit of resource inputs: 1. The direct materials cost per equivalent unit in the prior period was _____. 2. The direct materials cost per equivalent unit in the current period was ____. 3. The conversion cost per equivalent unit in the prior period was ____. 4. The conversion cost per equivalent unit in the current period was ____.

16 16 25 25

Hammes Corporation uses a process costing system with multiple production departments. Its beginning inventory in Department A was carried forward at a total cost of $115,000, and it comprised 3,000 equivalent units of direct materials (carried forward at $75,000) and 2,000 equivalent units of conversion (carried forward at $40,000). During the current period, the company used 90,000 equivalent units of direct materials costing $2.16 million, and 70,000 equivalent units of conversion costing $1.54 million. In evaluating the efficiency in Department A, management may conclude the following about the cost per equivalent unit of resource inputs: 1. The direct materials cost per equivalent unit in the prior period was ____. 2. The direct materials cost per equivalent unit in the current period was ____. 3. The conversion cost per equivalent unit in the prior period was ____. 4. The conversion cost per equivalent unit in the current period was ____.

25 24 20 22

Wescott Manufacturing uses a process costing system with multiple production departments. Its beginning inventory in Department A was carried forward at a total cost of $54,000, and it comprised 4,000 equivalent units of direct materials (carried forward at $24,000) and 3,000 equivalent units of conversion (carried forward at $30,000). During the current period, the company used 60,000 equivalent units of direct materials costing $375,000 and 40,000 equivalent units of conversion costing $392,000. In evaluating the current period's efficiency in Department A, management may conclude that

the cost per equivalent unit of conversion used in the current period was lower than it was in the prior period. *** Reason: Prior period cost per equivalent unit = $30,000/3,000 = $10 per equivalent unit Current period cost per equivalent unit = $392,000/40,000 = $9.80 per equivalent unit the cost per equivalent unit of direct materials used in the current period was higher than it was in the prior period. *** Reason: Prior period cost per equivalent unit = $24,000/4,000 = $6 per equivalent unit Current period cost per equivalent unit = $375,000/60,000 = $6.25 per equivalent unit

Process costing environments are often characterized by

the mass production of identical products. production involving a series of identifiable steps. the allocation of costs to specific processes as opposed to unique jobs.