Ch 17 Process Cost Systems

Jabari Steel Company has two departments, Casting and Rolling. In the Rolling Department, ingots from the Casting Department are rolled into steel sheet. The Rolling Department received 16,000 tons from the Casting Department in October. During October, the Rolling Department completed 15,600 tons, including 800 tons of work in process on October 1. The ending work in process inventory on October 31 was 1,200 tons. How many tons were started and completed during October?

14,800 tons

The Rolling Department of Jabari Steel Company had 800 tons in beginning work in process inventory (60% complete) on October 1. During October, 15,600 tons were completed. The ending work in process inventory on October 31 was 1,200 tons (25% complete). What are the total equivalent units for conversion costs?

15,420 units

The Rolling Department of Jabari Steel Company had 800 tons in beginning work in process inventory (60% complete) on October 1. During October, 15,600 tons were completed. The ending work in process inventory on October 31 was 1,200 tons (25% complete). What are the total equivalent units for direct materials for October if materials are added at the beginning of the process?

16,000 units

HW 17.3 The Rolling Department of Jabari Steel Company had 1,800 tons in beginning work in process inventory (40% complete) on October 1. During October, 30,700 tons were completed. The ending work in process inventory on October 31 was 1,500 tons (20% complete). What are the total equivalent units for direct materials for October if materials are added at the beginning of the process?

30,400 0% group 1 100% group 2 (30,700-1,800) = 28,900 100% group 3 1,500 28,900+ 1,500 = 30,400

The cost of direct materials transferred into the Rolling Department of Jabari Company is $6,000,000. The conversion cost for the period in the Rolling Department is $925,200. The total equivalent units for direct materials and conversion are 16,000 tons and 15,420 tons, respectively. Determine the direct materials and conversion costs per equivalent unit. Direct materials cost per equivalent unit: $_______________ per ton Conversion cost per equivalent unit: $____________________ per ton

375 60

HW 17.2 Units to be Assigned Costs Jabari Steel Company has two departments, Casting and Rolling. In the Rolling Department, ingots from the Casting Department are rolled into steel sheet. The Rolling Department received 46,000 tons from the Casting Department in October. During October, the Rolling Department completed 57,700 tons, including 13,500 tons of work in process on October 1. The ending work in process inventory on October 31 was 1,800 tons. How many tons were started and completed during October?

44,200 tons

HW 17.4 Equivalent Units of Conversion Costs The Rolling Department of Jabari Steel Company had 8,268 tons in beginning work in process inventory (10% complete) on October 1. During October, 63,600 tons were completed. The ending work in process inventory on October 31 was 3,816 tons (90% complete). What are the total equivalent units for conversion costs? Round to the nearest whole unit.

66,208 90% group 1 - 7,441.2 100% group 2 - 55,332 90% group 3 - 3,434,4 --------------------------------- = 66,207.6 = 66,208

The cost of energy consumed in producing good units in the Steaming Department of Apple Processing Company was $9,100 and $7,300 for June and July, respectively. The number of equivalent units produced in June and July was 65,000 and 73,000 liters, respectively. What is the cost of energy for the two months (rounded to the nearest cent)? a. $0.14 and $0.10 for June and July, respectively b. $0.10 and $0.15 for June and July, respectively c. $0.15 and $0.10 for June and July, respectively d. $0.10 and $0.14 for June and July, respectively

a. $0.14 and $0.10 for June and July, respectively

Which of the following represents the computation of direct materials cost per equivalent unit? a. Total direct cost for the period divided by total equivalent units of direct materials. b. Total equivalent units of direct materials divided by total direct cost for the period. c. Total direct cost for the period divided by total units of direct materials. d. Total units of direct materials divided by total direct cost for the period.

a. Total direct cost for the period divided by total equivalent units of direct materials.

The journal entry to recognize depreciation on machinery is ________. a. a debit to Factory Overhead and a credit to Accumulated Depreciation b. a debit to Accumulated Depreciation and a credit to Factory Overhead c. a debit to Factory Overhead and a credit to Depreciation Expense d. a debit to Depreciation Expense and a credit to Factory Overhead

a. a debit to Factory Overhead and a credit to Accumulated Depreciation

The cost per megawatt hour is determined by using process costing by a. accumulating the conversion costs. b. dividing the costs by megawatt hours. c. adding the cost of inventory .d. dividing the top part of the power stack into the lowest part.

a. accumulating the conversion costs.

The second step in preparing a cost of production report is ? a. computing the equivalent units of production. b. determining the units to be assigned costs. c. allocating costs to units transferred out. d. determining the cost per equivalent unit.

a. computing the equivalent units of production.

The third step in preparing a cost of production report is ? a. determining the cost per equivalent unit of production. b. computing the equivalent units of production. c. determining the units to be assigned costs. d. allocating costs to units transferred out.

a. determining the cost per equivalent unit of production.

The cost of production report may include the a. direct materials. b. purchase of all raw materials for the year. c. advertising costs. d. sales commissions on products sold.

a. direct materials.

The cost of transferred and partially completed units is determined by a. multiplying the cost per equivalent unit times the equivalent units of production. b. subtracting the cost per equivalent unit from the equivalent units of production. c. dividing the cost per equivalent unit by the equivalent units of production. d. adding the cost per equivalent unit to the equivalent units of production.

a. multiplying the cost per equivalent unit times the equivalent units of production.

The cost per equivalent unit is determined by dividing the __________ by the __________. a. total production costs; total equivalent units of production b. total equivalent units of production; total production costs c. goods available for sale in dollars; goods available for sale in units d. None of these choices are correct.

a. total production costs; total equivalent units of production

What is the conversion cost per equivalent unit, when the total conversion cost for the period is $1,225 and the total units of packaged drinking water produced during the same period is 5,000 gallons (70 percent complete). a. $0.17 per gallon b. $0.35 per gallon c. $2.86 per gallon d. None of these choices are correct.

b. $0.35 per gallon

Which of the following manufacturers is most likely to use a process cost system? a. Purse manufacturer b. Sports drink manufacturer c. Automobile manufacturer d. Guitar manufacturer

b. Sports drink manufacturer

The fourth step in preparing the cost of production report under the weighted average method is to a. determine the units to be assigned costs. b. allocate costs to transferred out and partially completed units. c. determine the cost per equivalent unit. d. compute equivalent units of production.

b. allocate costs to transferred out and partially completed units.

The first step in preparing a cost of production report is to _____. a. compute equivalent units of production b. determine the units to be assigned costs c. determine the cost per equivalent unit d. allocate costs to units transferred out and partially completed units

b. determine the units to be assigned costs

In a process cost system, the cost of units transferred out of each processing department must be a. determined along with the forecasted material overhead. b. determined along with the cost of any partially completed units remaining in the department. c. determined along with forecasted direct labor. d. determined along with the cost of the supervisor's salary.

b. determined along with the cost of any partially completed units remaining in the department.

The price differential of gasoline nationwide differs by a. 26%. b. 49%. c. 57% d. 65%.

c. 57%

During the current month, Grey Company sold 62,000 units for $10 each. Each unit had an equivalent cost of $7 each. The entry to journalize the sale would include which of the following? a. Cost of Goods Sold 620,000 Finished Goods 620,000 b. Finished Goods 620,000 Cost of Goods Sold 620,000 c. Cost of Goods Sold 434,000 Finished Goods 434,000 d. Finished Goods 434,000 Cost of Goods Sold 434,000

c. Cost of Goods Sold 434,000 Finished Goods 434,000

When can process costing be used in service businesses? a. When the inventory is similar .b. When the power stack is also used .c. Where the nature of the service is uniform across all units .d. At the accountant's discretions.

c. Where the nature of the service is uniform across all units.

under the __________ method, all production costs (materials and conversion costs) are combined together for determining equivalent units and cost per equivalent unit. a. FIFO b. LIFO c. average cost d. job order cost

c. average cost

When using the cost of production report to analyze the change in direct materials cost per equivalent unit, an investigation might reveal that direct materials costs a. will never decrease due to the way the cost is calculated. b. will only increase if conversion costs increase as well. c. may increase or decrease between periods, depending on the fluctuation of the cost of the direct materials. d. will never increase due to the way the cost is calculated.

c. may increase or decrease between periods, depending on the fluctuation of the cost of the direct materials.

Equivalent units of production are the a. portion of whole units that are complete with respect to materials or selling costs. b. portion of whole units that are complete with respect to factory overhead costs. c. portion of whole units that are complete with respect to materials or conversion costs. d. number of units in production during a period, whether completed or not.

c. portion of whole units that are complete with respect to materials or conversion costs.

For the month of July, Jacobs Company incurs a direct materials cost of $5,400 for 6,000 gallons of paint produced in its Mixing Department. It also incurs conversion costs of $1,200 with 80% completed. If the conversion cost per equivalent unit was $0.20 per gallon in June, what is the difference in the conversion cost per equivalent unit between the 2 months? a. $0.25 b. $0.70 c. $1.00 d. $0.05

d. $0.05

The following production data were taken from the records of the Finishing Department for July: Inventory in process, March 1, 30% completed 4,000 units Transferred to finished goods during March 37,500 units Ending work in process during March, 40% completed 3,000 units Determine the total equivalent units for direct materials, assuming that the first-in, first-out method is used to cost inventories. Assume that all direct materials are placed in process at the beginning of production. a. 39,300 units b. 37,500 units c. 40,500 units d. 36,500 units

d. 36,500 units

Process and job order cost systems are similar in ________ manner. a. recording and summarizing product costs b. classifying product costs as direct materials, direct labor, and factory overhead c. allocating factory overhead costs to products d. All of these choices are correct.

d. All of these choices are correct.

Process and job order cost systems are similar in that both systems _______. a. record and summarize product costs b. classify product costs as direct materials, direct labor, and factory overhead c. allocate factory overhead costs to products d. All of these choices are correct.

d. All of these choices are correct.

For which of the following businesses would process costing be appropriate? a. Specialty printer b. Custom furniture manufacturer c. Auto repair service d. Beverage producer

d. Beverage producer

What do electric companies, such as Duke Energy Corporation, use to match power supply to demand? a. Energy generator b. Electrical pyramid c. Megawatt hours d. Power stack

d. Power stack

Libby Company manufactures a single product by a continuous process, involving the production departments. The records indicate that direct materials, direct labor, and applied factory overhead for Department 1 were $160,000, $125,000, and $150,000, respectively. The entry to journalize the cost of direct labor for the period is a. Labor Expense 125,000 Work in Process—Department 1 125,000 b Wages Payable 125,000 Work in Process—Department 1 125,000 c. Work in Process—Department 1 125,000 Materials 125,000 d. Work in Process—Department 1 125,000 Wages Payable 125,000

d. Work in Process—Department 1 125,000 Wages Payable 125,000

Carmel Company manufactures a single product by a continuous process, involving the production departments. The records indicate that direct materials, direct labor, and applied factory overhead for Department 1 were $160,000, $125,000, and $150,000, respectively. The records further indicate that direct materials, direct labor, and applied factory overhead for Department 2 were $40,000, $60,000, and $70,000, respectively. In addition, work in process at the beginning of the period for Department 1 totaled $75,000, and work in process at the end of the period totaled $60,000.The entry to journalize the flow of costs into Department 2 during the period for direct materials is a. Materials 160,000 Work in Process—Department 2 160,000 b. Materials 60,000 Work in Process—Department 2

d. Work in Process—Department 2 40,000 Materials 40,000

The last step in preparing a cost of production report is to _____. a. compute equivalent units of production b. determine the units to be assigned costs c. determine the cost per equivalent unit d. allocate costs to units transferred out and partially completed units

d. allocate costs to units transferred out and partially completed units

The last step in preparing a cost of production report is ? a. determining the cost per equivalent unit. b. computing the equivalent units of production. c. determining the units to be assigned costs. d. allocating costs to units transferred out and partially completed units.

d. allocating costs to units transferred out and partially completed units.

In process costing, the amount of work in process inventory at the end of a period is valued by summing a. estimated costs budgeted for the inventory during the period. b. direct labor costs for the period. c. all actual costs that flowed through the department from the beginning to the end of the period. d. the costs remaining in each department account at the end of the period.

d. the costs remaining in each department account at the end of the period.

Normally, the final price of gasoline would be determined by a. the price of oil plus some additional amounts for distribution and profits. b. the price of oil plus the conversion cost of refining oil to gasoline. c. the conversion cost of refining oil to gasoline plus some additional amounts for distribution and profits. d. the price of oil, the conversion cost of refining oil to gasoline, plus some additional amounts for distribution and profits.

d. the price of oil, the conversion cost of refining oil to gasoline, plus some additional amounts for distribution and profits.

HW 17.5 The cost of direct materials transferred into the Rolling Department of Jabari Company is $421,200. The conversion cost for the period in the Rolling Department is $265,050. The total equivalent units for direct materials and conversion are 2,600 tons and 4,650 tons, respectively. Determine the direct materials and conversion costs per equivalent unit.

formula: total cost/total unit 421,200/2,6000 = 162 265,050/4,650= 57 Direct materials cost per equivalent unit: $162 per ton Conversion cost per equivalent unit: $57 per ton