...
A processing department transferred 3,000 units to the next department. Ending work in process in the department contained 100 units that were 40% complete with regard raw materials and 25% complete with regard to conversion costs. Use the weighted-average method, what were the equivalent units of production for materials costs in the department?
3040
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 ______.
34.60 = (3650+5000) / 250
Organize the following account in the order in which costs flow from one the the other in a process costing system.
Raw Materials WIP Finished Goods COGS
To record the purchase of raw materials, debit ______.
Raw Materials Inventory and credit Accounts Payable
Organize the following accounts in the order in which costs flow from one to the other in a process costing system.
Raw Materials, Work in process, Finished goods, Cost of goods sold.
True or false: The equivalent units of production computed under the weighted-average method does not take into account the percentage completed of beginning inventory.
True
True or false: The equivalent units of production computed under the weighted-average method does not take into account the percentage completed of the beginning inventory.
True
True or false: When using process costing, direct labor costs are often combined with manufacturing overhead into a single cost category.
True
True or false: When using the FIFO method, the number of units both started and completed during the period must be calculated.
True
Process costing and job-order costing have the same basic purposes. What is a key difference between the two systems?
Under process costing, it makes no sense to try to identify materials, labor and overhead cost with particular customer order.
Which of the following statements are true?
Under the weighted-average method, beginning inventory costs are treated just like costs added during the current period. Costs that move from one process to another are called transferred-in costs.
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
The journal entry to record direct materials costs in processing Department #1 is to debit:
WIP-Department #1 and credit Raw Materials
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
Issuing raw materials into production requires a ______ to the Raw Materials account.
Credit
When production is completed in the last processing department, the units are transferred to the _________ ________ Inventory account.
Finished Goods
The foundation of a process costing system is the ______.
Production Report
Recording the transfer of partially completed products from one processing department to another requires a debit and a credit to the _______ accounts in both of the processing departments.
Work in Process Inventory
The journal entry to record direct labor costs into Processing Department #1 is to debit ______
Work in Process Inventory (Dept. #1) and credit Salary or Wages Payable
weighted average method
combines costs and outputs from the current and prior periods
The two equivalent unit figures that are most often computed in process costing are for materials and ______.
conversion
_____ cost is direct labor cost plus manufacturing overhead cost.
conversion
The correct journal entry to apply manufacturing overhead costs Process #1 would be to ________ Manufacturing Overhead and ________ Work in Process Inventory (Process #1).
credit debit
The journal entry to record labor cost in the first department would be to ______ (debit/credit) Wages Payable and ______ (debit/credit) WIP.
credit, debit
When a customer's order is filled and units are sold there is a ______ (debit/credit) to Finished Goods and a ______ (debit/credit) to COGS.
credit, debit
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
The journal entry to record material cost in the second department includes a ____ to Work in Process-Department #2.
debit
The journal entry to record the transfer of completed units to finished goods is ______Finished Goods Inventory and_________ Work in Process Inventory.
debit Credit
The journal entry to record the transfer of completed units to finished goods is _____ finished goods and ____ work in process
debit, credit
The journal entry to record the transfer of completed units to finished goods would be to ______ (debit/credit) Finished Goods and ______ (debit/credit) WIP.
debit, credit
Operations costing is similar to job-order costing because ______.
each batch is charged for its own specific materials
To report ending inventory, partially completed units are translated into ______ units
equivalent
Number of partially completed units x Percentage completion = ______ ______
equivalent units
Equivalent units of production under the weighted-average method equal _____
equivalent units in ending work in process plus units transferred out
Equivalent units of production under the weighted-average method equal ______.
equivalent units in ending work in process plus units transferred out
When using process costing, nonmanufacturing costs are ______.
expensed during the period incurred
When production is completed in the last processing department, units are transferred to the ____ ____ account.
finished goods
When production is completed in the last processing department, units are transferred to the ______ ______ account.
finished goods
Cost of goods completed is transferred from Work in Process Inventory to _____
finished goods inventory
In process costing, manufacturing overhead costs are ______.
generally applied using a predetermined overhead rate
Process costing produces ______ units.;
homogeneous
A production report prepared using FIFO costing ______.
is somewhat more detailed than a report prepared using the weighted-average method
The two common methods for determining unit product costs are ______ costing.
job order and process
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 ______-______ and ______ costing.
job-order, process
Operations costing is similar to process costing because ______.
labor and overhead costs are accumulated by operation or department
When using process costing, ______
manufacturing costs are assigned to products as they move from one process to another
When computing equivalent units using the weighted-average method, _____
only partially completed units in ending inventory are part of the calculation
Products such as clothing that are produced in batches by can vary considerably from model to model may use ____ costing.
operation
When products have both similar and individual characteristics, ______ costing is used.
operation
An equivalent unit is a measure used to convert _______ completed units into the equivalent of a full unit
partially
The weighted average method includes costs for
prior and current periods
Work is performed on products, and materials, labor, and overhead costs are added to products in a(n) ______ department.
processing
Units completed - units in beginning inventory = units ______
started and completed
When using ______, the number of units both started and completed during the period must be computed
the FIFO method
Costs ______ in are treated as another category of cost, just like materials or conversion costs.
transferred
Costs that are moved from one production process to another are called __________ costs
transferred in
When unit costs are transferred from Department A to Department B, Department B will treat the costs as:
transferred in
the equivalent units completed are valued the same as units ___ for purposes of determining the cost per unit
transferred out
True or false: The equivalent units of production computed under the weighted-average method does not take into account the percentage completed of the beginning inventory.
true
True or false: The flow of costs through manufacturing accounts is basically the same for job-order costing and process costing.
true
Given 100 units in beginning inventory, 1,500 units started, and 200 units in ending inventory, the number of units completed equals ______
100 + 1,500 - 200 = 1,400
When ending work in process contains 500 units that are 34% completed, there are ____ equivalent units.
170=500x.34
Process costing assigns costs to units by each _______that they pass through. (Enter only one word per blank.)
Department
Conversion costs include ______.
Direct Labor and Manufacturing overhead
What is the journal entry to record the transfer of partially completed products from Processing Department #1 to Processing Department #2?
Debit Work in Process (Department #2) and credit Work in Process (Department #1).
When using process costing, materials, labor and overhead may be added in ______ processing department.
any
Under FIFO costing, partially completed units in beginning inventory are _______
assumed to be completed first
Raw materials being purchases is a ______ to Raw Materials Account
debit
The journal entry to record the transfer of completed units to finished goods is ________ Finished Goods Inventory and _______ Work in Process Inventory
debit credit
conversion cost
direct labor cost plus manufacturing overhead
Calculating the number of physical units worked on during the period is ______
done the same way under FIFO as under the weighted-average method
Calculating the number of physical units worked on during the period is ______.
done the same way under FIFO as under the weighted-average method
For a toy maker, rent, utilities, and insurance are all part of _______
manufacturing overhead
Job-order costing is used for ______.
many different products with unique production requirements
Job-order costing is used for:
many different products with unique production requirements
When using process costing, which of the following can be added in any department?
materials, labor and overhead
When computing equivalent units using the weighted-average method, ______.
only partially completed units in ending inventory are part of the calculation
Units completed - units in beginning inventory = units ________
started and completed
When using ______, the number of units both started and completed during the period must be computed.
the FIFO method
The activity in a processing department is performed ______.
uniformly on all units
When ending WIP contains 500 units that are 34% completed there are ______ equivalent units.
170
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
When computing the equivalent units of production under the weighted-average method, partially completed ______ inventory is ignored.
beginning work in process
The key difference between the weighted-average method and the FIFO method is how they deal with units and costs ______.
in beginning Work in Process Inventory
what would the journal entry be to record direct materials costs in processing Department #1?
Debit Raw Materials and Credit Work in Process in Department #1.
Similarities between job-order costing and process costing include the ______.
basic purpose to assign and compute product costs, flow of costs through the manufacturing accounts, manufacturing accounts used
Issuing raw materials into production requires a ______ to the Raw Materials account.
credit
Industries/products more suitable for process costing than job-order costing include
paper towels breakfast cereal sunscreen
An equivalent unit is a measure used to convert ______ completed units into the equivalent of a full unit.
partially
When comparing the FIFO method of computing equivalent units to the weighted-average method, ______
the weighted-average method blends together work and costs from prior periods with the current period, whereas FIFO separates the two periods
The journal entry to record direct materials costs in processing Department #1 is debit ______.
work in process department 1 and credit raw materials
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
A production report presents ______
both costs to be accounted for and costs accounted for
A production report presents ______.
both costs to be accounted for and costs accounted for
A production report includes ______.
both unit and cost information
Gross profit, as calculated based on journal entries, _______
is unadjusted because it is based on applied, not actual, overhead
Job cost sheets are used to accumulate costs when ______ ______ costing.
job order
When many different jobs or products are worked on each period, the most likely costing system used is ______.
job order
______-______ costing is used for many different products with unique production requirements.
job-order
examples of products that may use operation costing include
shoes, clothing, jewelry
A FIFO costing process had 400 units in beginning inventory. If 2,000 units were started and 600 units are in ending inventory,______ units were completed during the period.
1,800 (400+1200-600)
A FIFO costing process had 400 units in beginning inventory. If 2,000 units were started and 600 units are in ending inventory, ________ units were completed during the period.
1800
When unit costs are transferred from Department A to Department B, Department B will treat the costs as ______.
transferred in
After journal entries have been posted, the calculated gross profit is _____
unadjusted because it is based on applied manufacturing overhead
Methods to calculate departmental unit costs include ______.
weighted average and FIFO
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 which method(s) of costing?
weighted average only
The ______-______ method combines units and costs from both prior and current periods, while the ______ method includes equivalent units and unit costs for the work done during the period.
weighted average, FIFO
If WIP contains 300 units that are 40% complete the number of equivalent units is:
120
In order to track the cost of partially completed units, they must be converted into a(n) ____________ number of fully completed units
equivalent
To report ending inventory, partially completed units are translated into ____ number of partially completed units x percentage completion
equivalent or equal units
Place the steps in order as needed to prepare a production report using the weighted-average method.
1. Reconcile the number of physical units 2. Convert physical units into equivalent units 3. Calculate cost per equivalent unit 4. Reconcile the total cost of Work in Process Inventory 4. Prepare the report
If ending work in process contains 300 units that are 40% complete the number of equivalent units is ______.
120 = 300 x 0.4
Using the weighted-average method, there are a total of ______ equivalent units of production if WIP inventory has 100 units that are 40% complete and 300 units were transferred to the next department during the period.
340
A company's beginning WIP contained 200 units that were 20% complete. Those units were completed and transferred to finished goods. During the period 4,300 units were started. Of the units started, 4,000 were transferred to finished goods. The 300 units in ending WIP were 30% complete. Using the weighted-average method, the equivalent units of production equals:
4,290 Beginning WIP + started and completed = Transferred out + ending WIP x % complete. 200 + 4,000 = 4,200 + (300 x 30%) = 4,290
A company's beginning work in process contained 200 units that were 20% complete. Those units were completed and transferred to finished goods. During the period 4,300 units were started. Of the units started, 4,000 were transferred to finished goods. The 300 units in ending work in process were 30% complete. Using the weighted-average method, the equivalent units of production equals ______.
4290 = 4200+300x 30%
How many physical units are in ending inventory if 300 units were in beginning inventory, a total of 1,500 were started, and 1,300 were completed?
500 Reason: 300 + 1,500 = 1,300 + Units in Ending Inventory
Which of the following is not a method that can be used to prepare process costing production reports? last-in, first-out (LIFO) method first-in, first-out (FIFO) method weighted-average method
last-in, first-out (LIFO) method
All costs other than direct materials and direct labor that are incurred to produce a product are called indirect costs or _____________
manufacturing overhead
Both job-order costing and process costing provide a mechanism to compute unit ________ cost.
product
Units completed - units in beginning inventory = units ______.
started and completed
When comparing the FIFO method of computing equivalent units to the weighted-average method, ______.
the weighted-average method blends together work and costs from prior periods with the current period, whereas FIFO separates the two periods
The equivalent units completed are treated the same as units ______ out for purposes of determining the cost per unit.
transferred
Process costing accumulates costs by
process OR department OR operation
The production report _____
provides information to record manufacturing costs in accounting system
The first step in preparing a weighted-average production report is ______.
reconcile the number of physical units
A journal entry debiting Work in Process Inventory and crediting Raw Materials Inventory records ______
placing materials into production
The weighted-average method includes costs for ______.
prior and current periods
Which of the following is not a characteristic of operation costing?
products are homogeneous
Equivalent units of production are needed to ______
properly prepare GAAP-based financial statements determine the cost of partially completed units
A processing department transferred 2,000 units to the next department. Ending WIP contained 100 units that were 40% complete with regard to materials and 25% complete with regard to conversion costs. Using the weighted average, the equivalent units of production for materials is ______.
2,040
The journal entry to record labor costs for Process #1 is to ________ Salaries or Wages Payable and _______ Work in Process Inventory
credit debit
Equivalent units of production can be computed using:
either the weighted-average or FIFO method
In order to track the cost of partially completed units, they must be converted into a(n) _______ number of fully completed units.
equivalent
True or false: When using process costing, labor and overhead can be added in any department, but materials can only be added in the first processing department.
false because they can all be added in any processing department
The total cost of Work in Process Inventory _______
is divided between ending inventory and costs transferred to the next process or Finished Goods includes beginning Work in Process plus current costs
Equivalent units must be computed because ______
some units take a long time to manufacture it assigns appropriate value to all units for financial statement reporting costs of unfinished units must be included in Work in Process
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? 34,000 units 19,000 units 6,000 units 1,000 units
6,000 units Beginning inventory plus units started less units completed equals ending units in inventory. 1,000 + 20,000 − 15,000 = 6,000
When computing the equivalent units of production under the weighted-average method, partially completed ______ inventory is ignored.
beginning WIP
The formula to reconcile the number of physical units the company worked on during the period is units in ______.
beginning inventory + units started = units completed + units in ending inventory
In both the FIFO and weighted-average methods, costs to be accounted for include ______ WIP inventory while costs accounted for include ______ WIP inventory.
beginning, ending
Costs per equivalent unit are used to value
both units in ending inventory and units transferred to the next department
Costs per equivalent unit are used to value ______.
both units in ending inventory and units transferred to the next department
The journal entry to record labor cost in the first department is ____ Wages payable and ____ Work in process-Department #1.
credit, debit
the correct journal entry to apply manufacturing costs to processing dept 1 is ____ manufacturing overhead and _____ work in process dept 1
credit, debit
Reconciling the total cost of Work in Process Inventory is the ______ step in preparing a production report using the weighted-average method.
fourth
A processing department produces ______ units
homogeneous identical
In a processing department, all units of output are
homogeneous OR identical OR uniform OR indistinguishable OR equivalent
The key difference between the weighted-average method and the FIFO method is how they deal with units and costs ______
in beginning Work in Process Inventory
The total cost of Work in Process Inventory ______.
includes beginning Work in Process plus current costs is divided between ending inventory and costs transferred to the next process or Finished Goods
Under FIFO costing, the cost of beginning inventory ______
is automatically transferred out of Work in Process Inventory with units completed
Under FIFO costing, the cost of beginning inventory ______.
is automatically transferred out of Work in Process Inventory with units completed
A production report prepared using FIFO costing ______
is somewhat more detailed than a report prepared using the weighted-average method
A journal entry debiting Work in Process Inventory and crediting Raw Materials Inventory records ______.
placing materials into production
In the ______ costing system, transferred in costs are treated as just another category of costs, like materials or conversion costs.
process
In the ______-______ method, equivalent units of production are the number of units transferred to the next department or to finished goods plus equivalent units in ending WIP.
weighted-average
Costs are assigned to products as they move along the production process when using ______.
process costing only
Work is performed on products, and materials, labor, and overhead costs are added to products in a ___ department.
processing OR operating OR assembly
Information about the number of units and costs that flow through a manufacturing process during an accounting period is provided on the ________
production report
The first step in preparing a weighted-average production report is ______
reconcile the number of physical units
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
Which method calculates cost per equivalent unit using only costs incurred by the processing department in the current period?
FIFO
Which method is used when equivalent units and unit costs relate only to work done during the current period?
FIFO
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
JVL Inc. adds all direct materials at the start of the production process. For a given period they had 100 units in beginning inventory that were 40% complete as to conversion costs. During the period, 1,500 units were started and completed. Ending inventory contained 200 units that were 30% complete as to conversion costs. Compute the equivalent units for direct materials using the FIFO method.
0 in beginning inventory + 1,500 started and completed + 200 in ending inventory = 1,700
Parker Corporation makes candy bars. One of its processing departments reported the following information for August. Beginning work in process costs included $50,000 in direct materials and $110,000 in conversion cost. A total of $144,000 of direct materials costs and $210,000 in conversion cost was incurred during the month. Equivalent units totaled 12,000 for direct materials and 8,000 for conversion cost. Using the first-in, first-out (FIFO) method, Parker's cost per equivalent unit for conversion during August would be: $13.75 $18.00 $6.25 $26.25
$26.25 The cost per equivalent unit under FIFO is calculated by dividing the current period's costs by the total number of equivalent units. So, dividing $210,000 by 8,000 equivalent units, the cost per equivalent unit is $26.25 for conversion cost.
Canners Company uses weighted-average costing. Beginning WIP inventory had $3,650 of material costs. During the period, $5,00 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:
$34.60 ($3,650 + $5000)/250 = $34.60
Given the following, compute the conversion cost per equivalent unit using the weighted-average method. Conversion costs in beginning inventory $5,000 Conversion costs added in the current period $40,000 1,000 units were completed and transferred out during the period. 500 units in ending inventory are 50% complete.
$36
Given the following, compute the conversion cost per equivalent unit using the weighted-average method. Conversion costs in beginning inventory $5,000 Conversion costs added in the current period $40,000 1,000 units were completed and transferred out during the period. 500 units in ending inventory are 50% complete.
$36 Reason: ($5,000 + $40,000) / (1,000 + 500 × 50%) = $36 (Beginning Inventory+Current Costs) ----------------------------------------- (Equivalent Units) (Units in ending inventory*percentage of completion)
JVL Inc. adds all direct materials at the start of the production process. For a given period they had 100 units in beginning inventory that were 60% complete as to conversion costs. During the period, 1,500 units were started and completed. Ending inventory contained 200 units that were 30% complete as to conversion costs. Compute the equivalent units for conversion costs using the FIFO method.
1,600 units Reason: Since the beginning inventory is 60% complete, 40% is required to finish it. (100 × 40%) 40 in beginning inventory + 1,500 started and completed + (200 × 30%) 60 in ending inventory = 1,600
JVL Inc. adds all direct materials at the start of the production process. For a given period they had 100 units in beginning inventory that were 40% complete as to conversion costs. During the period, 1,500 units were started and completed. Ending inventory contained 200 units that were 30% complete as to conversion costs. Compute the equivalent units for direct materials using the FIFO method.
1,700 units Reason: 0 in beginning inventory + 1,500 started and completed + 200 in ending inventory = 1,700.
A FIFO costing process had 400 units in beginning inventory. If 2,000 units were started and 600 units are in ending inventory, ________ units were completed during the period.
1,800
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? 58,000 equivalent units 65,000 equivalent units 75,000 equivalent units 82,000 equivalent units
65,000 equivalent units First calculate completed and transferred units by taking 5,000 + 70,000 − 25,000 = 50,000. Both completed units and ending inventory are 100% complete with respect to direct materials, so the equivalent units for direct materials cost is the sum of 100% of the completed units plus 100% of the ending inventory. (50,000 × 100%) + (25,000 × 100%) = 75,000.
Which of the following is a key different between process and job-order costing? A. Job-order costing is used for indistinguishable products, and process costing is used for different jobs that have unique production requirements B. Process costing accumulated costs by order, and job-order costing accumulates costs by department. C. Job-order costing systems compute unit costs by department, and process costing compute unit costs by job. D. Under process costing, it makes no sense to try to identify materials, labor and overhead costs with a particular customer order.
D
The purchase of raw materials is recorded with a _______ , Correct Unavailable to Raw Materials Inventory and a Blank ______ to Accounts Payable
Debit Credit
The purchase of raw materials is recorded with a _____ to Raw Materials Inventory and a ________to Accounts Payable.
Debit Credit
When production is complete and goods are to be held for sale: Finished Goods Inventory is debited and Work in Process Inventory is credited Work in Process Inventory is debited and Finished Goods Inventory is credited Work in Process Inventory is debited and Raw Material Inventory is credited Work in Process Inventory is debited and Manufacturing Overhead is credited
Finished Goods Inventory is debited and Work in Process Inventory is credited When production is complete and goods are to be held for sale Finished Goods Inventory is debited and Work in Process Inventory is credited.
Once production is completed, total manufacturing costs are transferred to ______.
Finished Goods inventory
Differences between a job order cost system and a process cost system include all of the following except: Unit cost computations Flow of costs Documents used to tract costs Point at which costs are totaled
Flow of costs Process costing system has the same flow of costs (direct materials >>work in processes>>finished goods>>cost of goods sold. Process costing uses multiple work in processes but the flow of cost is the same as in job order.
Reconciling the total cost of Work in Process Inventory is the ______ step in preparing a production report using the weighted-average method.
Fourth
Weighted-Average Method
In the _____ method, equivalent units of production are the number of units transferred to the next department or to finished goods plus equivalent units in ending work in process.
When using process costing, costs are accumulated by ______.
Major Process
The production report includes all of the following information except for: Reconciliation of the cost of beginning inventory Physical units Equivalent units Cost per equivalent unit
Reconciliation of the cost of beginning inventory The production cost report includes information about the number of physical units, equivalent units, cost per equivalent unit, and a reconciliation of the cost of work in process.
Cost transferred from Work in Process (WIP) Inventory to Finished Goods (FG) Inventory ______.
Remain in FG Inventory until goods are sold may be called cost of goods manufactured may be called cost of goods completed
How are manufacturing overhead costs distributed in each process?
The costs are distributed based on a predetermined overhead rate.
Which of the following are similarities between job-order costing and process costing?
The flow of costs through the manufacturing accounts is basically the same for both costing systems. The same basic manufacturing accounts are used for both costing systems. The purpose is to assign raw materials, labor and manufacturing overhead to products.
Which of the following statements are true regarding the weighted-average and FIFO methods of process costing?
There are trade-offs in terms of simplicity and accuracy. The two methods produce similar results when a company has stable production patterns.
Costs that are moved from one production process to another are called ________ _____ costs.
Transferred in
When goods are sold, _____
a journal entry to record the sale and a journal entry to record the cost of goods sold must be made
When using process costing _____
a separate production report is prepared for each process
When using process costing, ______.
a separate production report is prepared for each process
in process costing, manufacturing overhead costs are distributed to each department
according to the amount of allocation base incurred in the department
In process costing, manufacturing overhead costs are distributed to each department:
according to the amount of the allocation base incurred in the department
Differences between job-order and process costing include that process costing ______.
accumulates cost by department, is used for indistinguishable products
Differences between job-order costing and process costing include that product costing:
accumulates costs by department is used for indistinguishable products
A processing department is an organization unit ______.
where work is performed on a product, and materials, labor, and overhead are added
Costs transferred in from Department A to Department B ______.
will always be 100% completed 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
when using process costing, each processing department has a separate _____ _____ ____ account.
work in process
the journal entry to apply overhead cost to processing department 1 is to debit
work in process Dept 1 and credit manufacturing overhead
Given 100 units in beginning inventory, 1,500 units started, and 200 units in ending inventory, the number of units started and completed equals ______.
1,300 Reason: 1,500 - 200 = 1,300. The other 100 units transferred out were in beginning inventory.
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 $2.66 $1.75 $2.35
$2.00 Cost per equivalent unit for conversion = ($4,400 + $32,000)/18,200 = $2.00
Using the FIFO method, what is the cost per equivalent unit if cost in beginning inventory is $3,000, current costs are $6,000, and there are 75 equivalent units of production?
$80 Reason: Cost per equivalent unit = $6,000/75 = $80.
How many physical units are in ending inventory if 300 units were in beginning inventory, a total of 1,500 were started, and 1,300 were completed?
300 + 1,500 = 1,300 + Units in Ending Inventory = 500
FIFO method
Bases costs solely on the costs and outputs from the current period
The formula to reconcile the number of physical units is Units in_________ Inventory + Units Started = Units Computed + Units in _________ Inventory.
Beginning Ending
Which of the following statements are true regarding the weighted-average and FIFO methods of process costing?
Both methods are acceptable under GAAP. The FIFO method may be more accurate. The weighted-average method is more commonly used.
Which of the following products would be more suitable for process costing than job-order costing?
Breakfast Cereal, Gasoline, Sunscreen
How are cost accumulated in process costing?
By department
Which of the following are true? A. Both job-order and process costing identify materials, labor and overhead costs by customer order. B. Unit costs are computed the same way regardless of the costing system used. C. Process costing should be used when a single product is produced on a continuous basis. D. Process costing accumulates costs by department, whereas job-order costing accumulates by job.
C & D
When customers purchase products, the manufacturing costs associated with the products are transferred to ______.
Cost of Goods Sold
The entry to record the sale of finished goods to customers is to debit _____
Cost of Goods Sold and credit Finished Goods Inventory
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 conversion costs Direct materials, indirect materials, and manufacturing overhead Direct materials, direct labor and indirect labor Direct materials, direct labor and manufacturing overhead
Direct materials, direct labor and manufacturing overhead In process costing, direct materials, direct labor, and manufacturing overhead are assigned to the product as it moves from one manufacturing process to the next.
A processing department transferred 3,000 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, what were the equivalent units of production for materials costs in the department?
Equivalent units of production for material costs = 3,000 + (100 x 40%) = 3,040
Under FIFO costing, partially completed units in beginning inventory are _______.
assumed to be completed first Reason: FIFO costing assigns the same conversion cost, but material costs may or may not be included in units already in process.
Which of the following statements is true regarding process costing?
A separate production report is prepared for each major process.
The entry to record the sale of finished goods to customers is to debit ______.
Cost of Goods Sold and credit Finished Goods Inventory
Which of the following formulas calculates cost per equivalent unit under FIFO costing?
Current Costs/Equivalent Units
When the Blending Department requisitions materials for use in the blending process, the cost is: Debited to the appropriate Work in Process Inventory Account Credited to the appropriate Work in Process Inventory Account Debited to the Manufacturing Overhead account Credited to the Manufacturing Overhead account
Debited to the appropriate Work in Process Inventory Account When raw materials are placed into production, the cost is debited to the appropriate Work in Process Inventory account and credited to the Raw Material Inventory account.
When using process costing, major material inputs used in production that can be traced to the product are ______.
Direct Materials
For a juice maker, grapes would be considered a(n)
Direct material
Both process costing and job-order costing assign which of the following costs to products?
Labor Materials Manufacturing overhead
Both process costing and job-order costing assign which of the following costs to products?
Materials, Manufacturing Overhead, Labor
A production report includes ______
both unit and cost information
Which of the following is not a category used to reconcile the number of physical units using the weighted average method of process costing? Units completed Units started Beginning units in inventory Cost of goods sold
Cost of goods sold The four categories used to reconcile the number of physical units under the weighted average method of process costing are beginning units in inventory, units started, units completed, and ending units in inventory.
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
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.
WIP
Direct labor + Manufacturing overhead = ______ cost
conversion
Given 100 units in beginning inventory, 1,500 units started, and 200 units in ending inventory, the number of units completed equals ______.
1,400 Reason: 100 + 1,500 - 200 = 1,400
Given 100 units in beginning inventory, 1,500 units started, and 200 units in ending inventory, the number of units started and completed equals ______
1,500 - 200 = 1,300 The other 100 units transferred out were in beginning inventory = 1,400
Which of the following statements are true?
Process costing accumulates cost by department, whereas job-order costing accumulates costs by job. Process costing should be used when a single product is produced on a continuous basis.
Using the weighted-average method, what is the total equivalent units of production if there are 150 units transferred to finished goods and 215 units that are 60% complete in ending work in process inventory?
279
A company transferred 150 units to finished goods and has 215 units in ending work in process inventory that are 60% complete. Using weighted-average costing, the number of equivalent units is ______.
279 = 150 + (215 x 60%) = 279
Which of the following statements are true regarding process costing production reports?
Production reports are used to determine how much cost to transfer from one process to the next. Production reports provide information accountants need to record manufacturing costs into the accounting system. Managers can use production reports to monitor and control production costs.
True or false: A production report prepared using the weighted-average method is structured very similarly to a production report using the FIFO method.
True
The journal entry to record labor costs for Process #1 is to _________ Salaries or Wages Payable and ___________ Work in Process Inventory.
Credit Debit
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 $2.00 $1.75 $2.35 $2.66
$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: $25,810 $27,550 $26,390 $24,070
$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).
Given $40,000 of current costs, $3,000 of costs in beginning inventory, and 500 equivalent units, the cost per equivalent unit using the weighted-average method is ____
$86
Given $40,000 of current costs, $3,000 of costs in beginning inventory, and 500 equivalent units, the cost per equivalent unit using the weighted-average method is
$86 (40,000+3000) --------------- (500)
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: $24,000 $64,000 $88,000 $40,000
$88,000 Cost of units transferred out = ($800 × 80 equivalent units) + ($300 × 80 equivalent units) = $88,000.
What is the formula for the cost per equivalent unit using the weighted-average method?
(Beginning Inventory + Current Costs)/Equivalent Units
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
Place the steps in order as needed to prepare a production report using the weighted-average method.
1.Reconcile the number of physical units. 2.Convert physical units into equivalent units. 3.Calculate cost per equivalent unit. 4.Reconcile the total cost of Work in Process Inventory. 5.Prepare the report.
There are _______ equivalent units in work process when work in process contains 500 units that are 34% completed.
170
Martin Corporation manufactures carpets. During the current period, one of its processing departments had a beginning inventory of 1,000 units that were 100% complete with respect to direct materials and 80% complete with respect to conversion cost. It started an additional 8,000 units into production, but could complete only 5,000 units during the period. The ending inventory is 100% complete with respect to direct materials and 40% complete with respect to conversion cost. Under the first-in, first-out (FIFO) method, the equivalent units in beginning inventory for conversion cost would be: 200 800 1,000 1,200
200 Since the units in beginning inventory are 80 percent complete with respect to conversion cost, they require only 20 percent conversion effort during the current period. So, we multiply the 1,000 physical units by 20 percent to arrive at 200 equivalent units of conversion cost for the beginning inventory 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 conversion costs for the month of March? 58,000 equivalent units 65,000 equivalent units 75,000 equivalent units 82,000 equivalent units
65,000 equivalent units First calculate completed and transferred units by taking 5,000 + 70,000 − 25,000 = 50,000. Then, convert ending inventory to equivalent units conversion costs (60% complete), (50,000 × 100%) + (25,000 × 60%) = 65,000.
A processing department transferred 3,000 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, what were the equivalent units of production for materials costs in the department?
= 3,000 + (100 x 40%) = 3,040
Under FIFO, the total costs accounted for is equivalent to: Beginning work in process costs + costs added this period Beginning work in process + costs assigned to units completed and transferred Costs assigned to units completed and transferred + costs added this period Costs assigned to units completed and transferred + costs assigned to ending work in process inventory
Costs assigned to units completed and transferred + costs assigned to ending work in process inventory Total costs accounted for = Costs assigned to units completed and transferred + costs assigned to ending work in process inventory. Total costs to account for = Beginning work in process costs + costs added this period.
The correct journal entry to apply manufacturing overhead costs Process #1 would be to _______ Manufacturing Overhead and ______ Work in Process Inventory (Process #1).
Credit Debit
The sale of goods is recorded with a _______ to Finished Goods Inventory and a _______to Cost of Goods Sold.
Credit Debit
On March 1, Baggett Company purchases raw materials worth $75,000 on credit. The journal entry to record the transaction would include: Credit to Raw Materials Inventory Credit to Work in Process Inventory Credit to Accounts Payable Credit to Manufacturing Overhead
Credit to Accounts Payable When materials are purchased, debit Raw Materials Inventory. The credit is to Cash or Accounts Payable, depending on how materials were purchased.
What is the entry to record the sale of finished goods to customers?
Debit COGS and Credit Finished Goods
What is the journal entry to record the transfer of partially completed products from Processing Department #1 to Processing Department #2?
Debit Work in Process (Department #2) and credit Work in Process (Department #1)
True or false: Converting partially computed units into equivalent units is done for manufacturing purposes but has no impact on the financial statements.
False
The journal entry to record the transfer of completed units to finished goods is debit ______.
Finished Goods Inventory and credit Work in Process Inventory
Information about the number of units and costs that flow through a manufacturing process during an accounting period is provided on the
Production Report
JVL Inc. adds all direct materials at the start of the production process. For a given period they had 100 units in beginning inventory that were 60% complete as to conversion costs. During the period, 1,500 units were started and completed. Ending inventory contained 200 units that were 30% complete as to conversion costs. Compute the equivalent units for conversion costs using the FIFO method.
Since the beginning inventory is 60% complete, 40% is required to finish it. (100 × 40%) 40 in beginning inventory + 1,500 started and completed + (200 × 30%) 60 in ending inventory = 1,600
To calculate cost per equivalent unit using the weighted-average method, add the cost of _______ inventory to current costs and divide by ________ units
beginning equivalent
What is a key difference between process and job order costing? Process costing accumulates costs by order, and job order costing accumulates costs by department. Under process costing, it makes no sense to try to identify materials, labor, and overhead costs with a particular customer order. Job order costing is used for homogeneous products, and process costing is used for different jobs that have unique production requirements. Job order costing systems compute unit costs by major process, and process costing systems compute unit costs by job.
Under process costing, it makes no sense to try to identify materials, labor, and overhead costs with a particular customer order.
When using process costing, a separate ______ account is maintained for each processing department.
WIP
The journal entry to apply overhead cost to processing Department #1 is to debit:
WIP-Department #1 and credit Manufacturing overhead
What are the different ways to compute the equivalent units of production?
Weighted-average method FIFO method
Equivalent units of production equals the number of units transferred to the next department (or finished goods) plus equivalent units in ending WIP under which method(s) of costing?
Weighted-average only
Recording the transfer of partially completed products from one processing department to another requires a debit and a credit to the _______ accounts in both of the processing departments
Work in Process Inventory
The journal entry to record direct labor costs into Processing Department #1 is to debit ______.
Work in Process Inventory (Dept. #1) and credit Salary or Wages Payable
Recording the transfer of partially completed products from one processing department to another, requires a debit and a credit to the ________ account in both of the processing departments.
Work in process
To calculate cost per equivalent unit using the weighted-average method, add the cost of ______ WIP inventory to costs added during the period and divide by the equivalent units of production.
beginning