Chapter 17 - Process Costing Review
(LO 4) Fortner Company has no beginning work in process; 9,000 units are transferred out and 3,000 units in ending work in process are one-third finished as to conversion costs and fully complete as to materials cost. If total materials cost is $60,000, the unit materials cost is: (a)$5.00. (b)$5.45 rounded. (c)$6.00. (d)No correct answer is given.
a
In RYZ Company, there are zero units in beginning work in process, 7,000 units started into production, and 500 units in ending work in process 20% completed. The physical units to be accounted for are: (a)7,000. (b)7,360. (c)7,500. (d)7,340.
a
(LO 2) In a process cost system, manufacturing overhead: (a)is assigned to finished goods at the end of each accounting period. (b)is assigned to a work in process account for each job as the job is completed. (c)is assigned to a work in process account for each production department on the basis of a predetermined overhead rate. (d)is assigned to a work in process account for each production department as overhead costs are incurred.
c
Mora Company has 2,000 units in beginning work in process, 20% complete as to conversion costs, 23,000 units transferred out to finished goods, and 3,000 units in ending work in process complete as to conversion costs. The beginning and ending inventory is fully complete as to materials costs. Equivalent units for materials and conversion costs are, respectively: (a)22,000, 24,000. (b)24,000, 26,000. (c)26,000, 24,000. (d)26,000, 26,000.
c
The Fabricating Department for Outdoor Essentials has the following production and cost data for the current month. - Beginning Work in Process - 0 - Units Transferred Out - 15,000 - Ending Work in Process - 10,000 Materials are entered at the beginning of the process. The ending work in process units are 30% complete as to conversion costs. Compute the equivalent units of production for (a) materials and (b) conversion costs.
(a) Since materials are entered at the beginning of the process, the equivalent units of ending work in process are 10,000. Thus, 15,000 Units + 10,000 Units = 25,000 equivalent units of production for materials. (b) Since ending work in process is only 30% complete as to conversion costs, the equivalent units of ending work in process are 3,000 (10,000 units x 30%) Thus, 15,000 Units + 3,000 Units = 18,000 equivalent units of production for conversion costs.
Ending Work in Process Formula
Ending Work in Process = Beginning Work in Process + Manufacturing costs - Cost of goods manufactured
Equivalent Units of Production Formula
Equivalent Units of Production = Units completed and Transferred Out + Equivalent Units of Ending Work in Process
1. (T/F) A law firm is likely to use process costing for major lawsuits.
F
3. (T/F) Both job order and process costing determine product costs at the end of a period of time, rather than when a product is completed.
F
4. (T/F) Process costing does not keep track of manufacturing overhead.
F
2. (T/F) A manufacturer of paintballs is likely to use process costing.
T
Total Manufacturing Cost per Unit Formula
Total Manufacturing Cost per Unit = Unit Materials Cost + Unit Conversion Cost
Unit Conversion Cost Formula
Unit Conversion Cost = Total Conversion Costs/ Equivalent Units of Conversion Costs
Unit Cost Formula
Unit Cost = Total Cost/ Total Units
Unit Materials Cost Formula
Unit Materials Cost = Total Materials Cost/ Equivalent Units of Materials
(LO 3) Conversion costs are the sum of: (a)fixed and variable overhead costs. (b)labor costs and overhead costs. (c)direct material costs and overhead costs. (d)direct labor and indirect labor costs.
b
A production cost report: (a)is an external report. (b)shows both the production quantity and cost data related to a department. (c)shows equivalent units of production but not physical units. (d)contains six sections.
b
In making journal entries to assign raw materials costs, a company using process costing: (a)debits Finished Goods Inventory. (b)often debits two or more work in process accounts. (c)generally credits two or more work in process accounts. (d)credits Finished Goods Inventory
b
Largo Company has unit costs of $10 for materials and $30 for conversion costs. If there are 2,500 units in ending work in process, 40% complete as to conversion costs, and fully complete as to materials cost, the total cost assignable to the ending work in process inventory is: (a)$45,000. (b)$55,000. (c)$75,000. (d)$100,000.
b
In a process cost system, the flow of costs is: (a)work in process, cost of goods sold, finished goods. (b)finished goods, work in process, cost of goods sold. (c)finished goods, cost of goods sold, work in process. (d)work in process, finished goods, cost of goods sold.
d
Indicate which of the following statements is not correct. (a)Both a job order and a process cost system track the same three manufacturing cost elements—direct materials, direct labor, and manufacturing overhead. (b)A job order cost system uses only one work in process account, whereas a process cost system uses multiple work in process accounts. (c)Manufacturing costs are accumulated the same way in a job order and in a process cost system. (d)Manufacturing costs are assigned the same way in a job order and in a process cost system.
d
The Mixing Department's output during the period consists of 20,000 units completed and transferred out, and 5,000 units in ending work in process 60% complete as to materials and conversion costs. Beginning inventory is 1,000 units, 40% complete as to materials and conversion costs. The equivalent units of production are: (a)22,600. (b)23,000. (c)24,000. (d)25,000
b
Which of the following items is not characteristic of a process cost system? (a)Once production begins, it continues until the finished product emerges. (b)The products produced are heterogeneous in nature. (c)The focus is on continually producing homogeneous products. (d)When the finished product emerges, all units have precisely the same amount of materials, labor, and overhead.
b