Internal Exam 2

In process cost accounting, the cost of direct materials & direct labor are charged directly to: service departments process departments customer accounts receivable job orders

process departments

Department W had 2,400 units 1/3 completed at the beginning of the period; 16,000 units were transferred to Department X from Department W during the period; and 1,800 units were 1/2 completed at the end of the period. Assume the completion ratios apply to direct materials and conversion costs. What is the total number of units to be assigned cost on the cost production report for Department W?

16000 + 1800 (assume the 2400 is already in the 16000 group because beginning of period assumption) =17800

The 4 steps necessary to complete a cost of production report in a process cost system are 1. allocate costs to transferred and partially completed units 2. determine the units to be assigned costs 3. determine the cost per equivalent unit 4. calculate equivalent units of production

2, 4, 3, 1

Department A had 5,000 units in work in process inventory that were 60% completed as to labor and overhead at the beginning of the period; 34,000 units of direct materials were added during the period; 31,000 units were completed during the period; and 2,000 units were 80% completed as to labor and overhead at the end of the period. All materials are added at the beginning of the process. The FIFO method is used to cost inventories. The number of equivalent units of production for conversion costs for the period was

31000 - (5,000 x .6) + (2000 x .8) = 29,600 units

Department A had 5,000 units in work in process inventory that were 60% completed as to labor and overhead at the beginning of the period; 34,000 units of direct materials were added during the period; 31,000 units were completed during the period; and 2,000 units were 80% completed as to labor and overhead at the end of the period. All materials are added at the beginning of the process. The FIFO method is used to cost inventories. The number of equivalent units of production for material costs for the period was

34,000

Following production data was taken from the records of the Finishing Department for June: Inventory in Process June 1 (30% completed): 4,000 units Completed Units during June: 65,000 units Ending Inventory (60% complete): 7,000 units What is the total number of units to be assigned cost, assuming that the FIFO method is used to cost inventories and materials were added at the beginning of the process?

65,000 + 7,000 units need to be assigned costs =72,000 units

In a process cost system, the cost of completed production in Department A is transferred to Department B by which of the following entries? Debit work in process Department B; credit work in process Department A Debit work in process Department B; credit finished goods Department A Debit work in process Department B; credit COGS Department A Debit finished goods Department A; credit work in process Department B

Debit work in process Department B; credit work in process Department A

A process cost accounting system records all actual factory overhead costs directly in the WIP account

False

Once equivalent units are calculated for materials, this number will also be used for direct labor and factory overhead.

False

The FIFO method of process costing is simpler than the Average Cost method

False

The entry to transfer goods in process from Department X to Department Y includes a debit to Work in Process-Department X

False

Costs of ending WIP inventory are included in the cost per equivalent unit computation

True

Direct materials, direct labor, and factory overhead are assigned to each manufacturing process in a process costing system.

True

Equivalent units should be computed separately for direct materials and conversion costs.

True

In a process costing system, costs flow into finished goods inventory only from the work in process inventory of the last manufacturing process

True

The FIFO method separates work done on beginning inventory in the previous period from work done on it in the current period.

True