Chapter 5 - Process Costing

The Assembly Department started the month with 35,000 units in its beginning work in process inventory. An additional 472,000 units were transferred in from the prior department during the month to begin processing in the Assembly Department. There were 34,000 units in the ending work in process inventory of the Assembly Department. How many units were transferred to the next processing department during the month?

473,000

Fabian Corporation uses the weighted-average method in its process costing system. The Assembly Department started the month with 9,000 units in its beginning work in process inventory that were 70% complete with respect to conversion costs. An additional 90,000 units were transferred in from the prior department during the month to begin processing in the Assembly Department. During the month 87,000 units were completed in the Assembly Department and transferred to the next processing department. There were 12,000 units in the ending work in process inventory of the Assembly Department that were 20% complete with respect to conversion costs. What were the equivalent units for conversion costs in the Assembly Department for the month?

89,400

In calculating cost per equivalent unit under the weighted-average method, prior period costs are not combined with current period costs.

False

In the weighted-average method, the equivalent unit is to measure the actual cost incurred in the production period.

False

Job-order costing uses several different WIP accounts for different processing departments.

False

Process costing is used in those situations where many different products or services are produced each period to customer specifications.

False

Under the weighted-average method, the equivalent units used to compute the unit costs of ending inventories relate only to work done during the current period.

False

Which of the following statements about a process costing system is incorrect?

In a process costing system, materials costs are traced to units of products.

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

Oil refinery.

When materials are purchased in a process costing system, a materials account is debited with the cost of the materials.

True

For which situation(s) below would an organization be more likely to use a process costing system rather than a job-order costing system?

a paper mill that processes wood pulp into large rolls of paper

When the weighted-average method of process costing is used, a department's equivalent units are computed by:

adding the units transferred out to the equivalent units in ending inventory.

Costs in an operation costing system are accumulated by:

by both job and departments.

Pulo Corporation uses a weighted-average process costing system. The company has two processing departments. Production starts in the Assembly Department and is completed in the Finishing Department. The units completed and transferred out of the Assembly department during April will become the:

units started in production in Finishing for April.