ACCT 2302 Ch.3 Process Costing

Sammy Co. uses process costing to account for the production of popcorn. Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Equivalent units have been calculated to be 20,000 units for materials and 18,200 units for conversion costs. Beginning inventory consisted of $6,200 in materials and $4,400 in conversion costs. May costs were $47,000 for materials and $32,000 for conversion costs. Ending inventory still in process was 4,000 units (100% complete for materials, 55% for conversion). The cost per equivalent unit for conversion costs using the weighted average method would be:

$2.00 Cost per equivalent unit for conversion = ($4,400 + $32,000)/18,200 = $2.00.

Which of the following is not a category used to reconcile the number of physical units using the weighted average method of process costing?

Cost of goods sold

Corny Corp. uses a process costing system. January 1, 1,000 units were in inventory. During January 20,000 units were started and 15,000 units were completed. How many units were in ending inventory on January 31?

6,000 Beginning inventory plus units started less units completed equals ending units in inventory. 1,000 + 20,000 − 15,000 = 6,000

A department adds raw materials to a process at the beginning of the process and incurs conversion costs uniformly throughout the process. For the month of March, there were 5,000 units in the beginning work in process inventory; 70,000 units were started into production in March; and there were 25,000 units that were 60% complete in the ending work in process inventory at the end of March. What were the equivalent units of production for conversion costs for the month of March?

65,000 equivalent units

A department adds raw materials to a process at the beginning of the process and incurs conversion costs uniformly throughout the process. For the month of March, there were 5,000 units in the beginning work in process inventory; 70,000 units were started into production in March; and there were 25,000 units that were 60% complete in the ending work in process inventory at the end of March. What were the equivalent units of production for materials for the month of March?

75,000 equivalent units

Under process costing, which manufacturing costs are assigned to the product as it moves from one manufacturing process to the next?

Direct materials, direct labor and manufacturing overhead

Differences between a job order cost system and a process cost system include all of the following except:

Flow of costs

Sammy Co. uses process costing to account for the production of popcorn. Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Equivalent units have been calculated to be 20,000 units for materials and 18,200 units for conversion costs. Beginning inventory consisted of $6,200 in materials and $4,400 in conversion costs. May costs were $47,000 for materials and $32,000 for conversion costs. Ending inventory still in process was 4,000 units (100% complete for materials, 55% for conversion). The cost per equivalent unit for materials using the weighted average method would be:

$2.66 Cost per equivalent unit for conversion = ($6,200 + $47,000)/20,000 = $2.66.

Paula's Fab Tee Company, which prints T-shirts, has three processing departments (printing, labeling, and packaging). The total cost per equivalent unit was $17.80 for the printing department, $0.80 for the labeling department, and $0.40 for the packaging department. The total cost of the 1,450 units that were transferred out of the Work in Process Inventory (Packaging) account to the Finished Goods Inventory account was:

$27,550 Total cost per unit = Conversion cost + Additional inventory cost + Labeling, tagging, and packaging cost = $17.80 + $0.80 + 0.40 = $19. The total cost of units produced and transferred to finished goods inventory is $27,550 (1,450 units × $19 per unit).

The cleaning process of Komin Inc. has calculated its cost per equivalent unit for materials to be $800 and for conversion to be $300. 80 units were transferred out of the cleaning department. So, the cost of units transferred out from the process is:

$88,000 Cost of units transferred out = ($800 × 80 equivalent units) + ($300 × 80 equivalent units) = $88,000.