Cost Acct CH 4

Using the weighted-average method, if work in process inventory has 100 units that are 40% complete and 300 units were transferred to the next department during the period, there are a total of equivalent units of production.

340; 300+(100*.4)

One way to compute equivalent units under the FIFO method is to add units transferred ___ to equivalent units in____ work in process inventory and then subtract the equivalent units in ___ work in process inventory.

out, ending, beginning

The weighted-average method includes costs for ______.

prior and current periods

Each department has a separate Work in Process account when using ______ costing.

process

Examples of products that may use operation costing include ______.

shoes clothing jewelry

Prior costs are blended with current period costs when using the ______ method(s).

weighted-average

Methods to calculate departmental unit costs include ______.

weighted-average FIFO

If there are no beginning or ending inventories, then the FIFO and weighted-average methods will produce identical results because unit costs ______.

will be based on just the current period's costs

The method of process costing that is generally considered to be the most accurate, but also the most complex is ______.

FIFO

The equivalent units of production computed under the weighted-average method takes into account the percentage completed of the beginning inventory.

False

The journal entry to record the transfer of completed units to the finished goods warehouse is to debit ______.

Finished goods and credit Work in process

The flow of costs through manufacturing accounts is basically the same for job-order costing and process costing.

True

When using process costing, materials, labor and overhead may be added in ______ processing department.

When using process costing, materials, labor and overhead may be added in ______ processing department.

The journal entry to record direct materials costs in processing Department #1 is debit ______.

Work in Process-Department #1 and credit Raw Materials

The journal entry to apply overhead cost to processing Department #1 is to debit ______.

Work in process-Department #1 and credit Manufacturing overhead

The journal entry to record direct labor costs in processing Department #1 is debit ______,

Work in process-Department #1 and credit Salaries and wages payable

When computing the equivalent units of production under the weighted-average method, partially completed ______ inventory is ignored.

beginning work in process

In both the FIFO and weighted-average methods, costs to be accounted for include ____ work in process inventory, while costs accounted for include ____ work in process inventory.

beginning, ending

The journal entry to record material cost in the second department includes a (debit/credit) to Work in Process-Department #2.

debit

Process costing accumulates costs by

department

The method of allocating service department costs that ignores services provided by one service department to other service departments is the ______ method.

direct

The direct method allocates service department costs ______.

directly to operating departments

When production is completed in the last processing department, units are transferred to the

finished goods account

In process costing, manufacturing overhead costs are ______.

generally applied using a predetermined overhead rate

A processing department produces ________ units.

identical homogeneous

Services provided between service departments are known as _____ services

interdepartmental or reciprocal

Differences between job-order and process costing include that process costing ______.

is used for indistinguishable products accumulates costs by department

When many different jobs or products are worked on each period, the most likely costing system used is ______.

job-order

The two most commonly used methods for determining unit product costs are

job-order costing and process costing

Job-order costing is used for ______.

many different products with unique production requirements

Companies allocate service department costs to operating departments to ______.

motivate managers calculate unit costs evaluate managerial performance

The FIFO and weighted-average methods will produce identical results if there are ______ ending inventories.

never any

Which of the following is not a characteristic of operation costing?

Products are homogeneous.

True or false: Allocated costs of other service departments are reallocated back to the original service department allocations when using the step-down method.

False

Examples of service departments include ______.

cafeteria internal auditing human resources

One reason service departments allocate costs to operating departments is to enable ______.

calculating unit costs

When a customer's order is filled and units are sold, there is a ______ to Finished Goods and a ______ to Cost of Goods Sold.

credit, debit

Equivalent units of production under the weighted-average method equals ______.

equivalent units in ending work in process plus units transferred out

The two common methods for determining unit product costs are ______ costing.

job-order and process

Equivalent units of production equals the number of units transferred to the next department (or finished goods) plus equivalent units in ending work in process under ______ costing.

only weighted-average

The two types of departments in large organizations are Blank______.

operating and service

Industries/products more suitable for process costing than job-order costing include:

sunscreen. flour. paper towels.

The equivalent units completed are valued the same as units ______ for purposes of determining the cost per unit.

transferred out

If ending work in process contains 300 units that are 40% complete the number of equivalent units is ______.

120

A company has 50,000 square foot building. Square footage is used as follows: 5,000 feet by Service Dept. #1, 10,000 feet by Service Dept. #2 and 35,000 feet by the two operating departments. Under the direct method, _____square feet will be used in the allocation of Service Dept. #2's costs

35,000 sqft

Which of the following equations is correct?

Units in beginning WIP + units started or transferred in = Units in ending WIP + units completed and transferred out

When compared with weighted-average costing, the FIFO method is ______ complex.

both more accurate and more

Direct labor plus manufacturing overhead equals ______ cost.

conversion

Operations costing is similar to job-order costing because ______.

each batch is charged for its own specific materials

Number of partially completed units x Percentage completion =

equivalent units

The step-down method begins allocating cost with the department that provides the _____ amount of service to other service departments.

greatest

When allocating costs, the step-down method begins with the service department offering the ______ departments.

greatest amount of services to other service

Operations costing is similar to process costing because ______.

labor and overhead costs are accumulated by operation or department

Work is performed on products, and materials, labor, or overhead costs are added to products in a(n) department.

processing

Purchasing is an example of a(n) department.

service

A processing department is an organization unit ______

where work is performed on a product, and materials, labor or overhead are added

The activity in a processing department is performed ______.

uniformly on all units

When using the step-down method, after a service department's costs have been allocated ______.

costs of other service departments are not reallocated back to it

When products have both similar and individual characteristics, ______ costing is used.

operation

When computing equivalent units, FIFO and weighted-average treat ______ the same.

ending inventory

Similarities between job-order costing and process costing include the ______.

manufacturing accounts used flow of costs through the manufacturing accounts basic purpose to assign and compute product costs

Most large organizations have both ____departments where the central purposes of the organization are carried out and _____departments that provide assistance.

operating; service

Products such as clothing that are produced in batches but can vary considerably from style to style may use costing.

operation

When unit costs are transferred from Department A to Department B, Department B will treat the costs as ______.

transferred in

True or false: Process costing is used when a company produces a continuous flow of units that are homogeneous.

True

A product requires processing in two departments, A and B. Products start in Dept. A. Costs transferred out of Dept. A will be transferred to ______.

Work in Process - Dept. B

Under the FIFO method, the cost of units transferred out consists of the cost ______.

to complete beginning work in process inventory in beginning work in process inventory of units started and completed during the period

The journal entry to record the transfer of partially completed products from processing Department #1 to processing Department #2 is to debit Work in Process Department ______.

#2 and credit work in process-department #1

LPM Industries has two service departments (Administration and Maintenance) and two operating departments. Departmental costs before allocations are $950,000 for Administration and $1,650,000 for Maintenance. Maintenance costs are allocated on the basis of the number of employees. Administration has 450 employees; Maintenance has 750 employees; Operating Department 1 has 1,350 employees and Operating Department 2 has 1,200 employees. Using the direct method, the cost allocated from Maintenance to Administration is ______.

$0

Franklin, Inc. had costs in beginning work in process inventory of $4,730. During the period a total of $12,900 costs were added. Franklin uses FIFO costing and had 860 equivalent units. The cost per equivalent unit is ______.

$15; FIFO costing so just 12900/860=15

LPM Industries has two service departments (Administration and Maintenance) and two operating departments. Departmental costs before allocations are $950,000 for Administration and $1,650,000 for Maintenance. Maintenance costs are allocated on the basis of the number of employees. Administration has 450 employees; Maintenance has 750 employees; Operating Department 1 has 1,350 employees and Operating Department 2 has 1,200 employees. Using the direct method, Maintenance cost allocated to Operating Department 1 is ______.

$873,529= (1,650,000*(.45/(.45+.40))

The formula for the cost per equivalent unit using the weighted-average method is ______.

(Cost of beginning work in process inventory + Cost added during the period) ÷ Equivalent units of production

If equivalent units of production using weighted-average is 4,650 units and there were 500 units in beginning inventory that were 45% complete, equivalent units of production under FIFO equals

4425; 4650-(500*.45)=4425

If equivalent units of production using weighted-average is 8,125 units and there were 1,200 units in beginning inventory that were 30% complete, equivalent units of production under FIFO equals ______.

7,765; 8125-(1200*.30)

Given ending work in process of 400 equivalent units, beginning work in process inventory of 500 equivalent units and 800 units transferred out, equivalent units of production using FIFO is ______.

700; (800+400-500)

From a cost control perspective, the best method for process costing is ______.

FIFO

Costs per equivalent unit are used to value ______.

both ending inventory and units transferred to the next department

Costs in beginning work in process inventory was $4,500 and $37,800 in costs were added during the period. If there are 7,050 equivalent units, the cost per equivalent unit under the weighted-average method is $

$6; (4500+37800)/7050=$6

Which of the following is included in computing equivalent units under the FIFO method, but not under the weighted-average method?

Equivalent units to complete beginning work in process

True or false: A cost reconciliation report using the weighted-average method reports the same information as a cost reconciliation report using FIFO.

True

In process costing, manufacturing overhead costs are distributed to each department ______.

according to the amount of the allocation base incurred in the department

Units in ______ work in process inventory + units started or transferred in = Units in _____work in process inventory + units completed and transferred out.

beginning, ending

Interdepartmental services are services provided ______

between service departments

Costs transferred in from Department A to Department B ______.

will always be 100% complete with respect to Department A

Recording the transfer of partially completed products from one processing department to another, requires a journal entry that affects the ______ account of both processing departments.

work in process

When using process costing, a separate ______ account is maintained for each processing department.

work in process

LPM Industries has two service departments (Administration and Maintenance) and two operating departments. Departmental costs before allocations are $950,000 for Administration and $1,650,000 for Maintenance. Maintenance costs are allocated on the basis of the number of LPM employees. Administration has 450 employees; Maintenance has 750 employees; Operating Department 1 has 1,350 employees and Operating Department 2 has 1,200 employees. Using the step-down method, how much of the cost from the Maintenance Department will be allocated to Administration?

$247,500

Canners Company uses weighted-average costing. Beginning work in process inventory had $3,650 of material costs. During the period, $5,000 of materials and $9,250 in conversion costs were added. If there are 250 equivalent units of production for materials, the cost per equivalent unit for materials is ______.

$34.6; (3650+5000)/250=$34.6

LPM Industries has two service departments (Administration and Maintenance) and two operating departments. Departmental costs before allocations are $950,000 for Administration and $1,650,000 for Maintenance. Maintenance costs are allocated on the basis of the number of employees. Administration has 450 employees; Maintenance has 750 employees; Operating Department 1 has 1,350 employees and Operating Department 2 has 1,200 employees. Using the step-down method, how much of the cost from the Maintenance Department will be allocated to Operating Department 2? Multiple choice question. $528,000 $742,500 $660,000 $776,471

$660,00 1,650,000*1,200(450+1350+1200)

Costs in beginning work in process inventory totaled $1,200 and $6,000 in costs were added during the period. If there are 75 equivalent units, the cost per equivalent unit using FIFO is ______.

$80 ($6000/75)

LPM Industries has two service departments (Administration and Maintenance) and two operating departments. Departmental costs before allocations are $950,000 for Administration and $1,650,000 for Maintenance. Maintenance costs are allocated on the basis of the number of employees. Administration has 450 employees; Maintenance has 750 employees; Operating Department 1 has 1,350 employees and Operating Department 2 has 1,200 employees. Using the step-down method, how much of the cost from the Maintenance Department will be allocated to Operating Department 2?

$660,000

A processing department transferred 2,000 units to the next department. Ending work in process in the department contained 100 units that were 40% complete with regard to materials and 25% complete with regard to conversion costs. Using the weighted-average method, the equivalent units of production for materials is ______.

2,040; 100*.4

Which of the following costs is included in the numerator of the weighted-average method's computation of cost per equivalent unit, but excluded when FIFO is used?

Beginning work in process inventory

The entry to record the sale of finished goods to customers is a debit to ______.

Cost of goods sold and a credit to Finished goods

The correct journal entry to apply manufacturing costs to processing Department #1 is (debit/credit) Manufacturing overhead and (debit/credit) Work in process-Department #1.

Credit, debit

The journal entry to record labor cost in the first department is _____ (debit/credit) Wages payable and _____(debit/credit) Work in process-Department #1.

Credit, debit

The journal entry to record the transfer of completed units to finished goods is _____ Finished Goods and ______ Work in Process.

Debit, Credit

A company occupies a building that has 50,000 square feet. Of the total square footage, 5,000 is used by Service Dept. #1, 10,000 is used by Service Dept. #2 and 35,000 is used by the two operating departments. Under the direct method of service department allocation, square footage used in the allocation of Service Dept. #1's costs will be ______.

35000

For cost control purposes, the ______ method is better than the ______ method.

FIFO, weighted-average

True or false: A processing department needs to calculate a separate unit cost for each type of cost incurred.

True

When using process costing, which of the following can be added in any department?

Materials, labor and overhead

Match the costing method to the manner in which unit costs are calculated.

Weighted-average method: Combines costs and outputs from the current and prior periods. FIFO method: Bases costs solely on the costs and outputs from the current period.