accounting chapter 5

what are the two ways of calculating equivalent units

FIfo weighted-average method

a processing department is an organization unit where work is performed on ______

a product and materials, labor or overhead are added

when using process costing materials, labor and overhead may be added in __________ processing department

any

when computing the equivalent units of production under the weighted average method the fat that the units in the _________ were partially complete with respect to the materials and conversion is ignored

beginning work in process inventory

journal entry record final sale

cogs 50 credit finished goods 50 accounts receivable 150 credit sales rev 150

direct labor and manufacturing overhead may be combined into one classification of product cost called

conversion costs

in the flow of materials, labor and overhead cost (general) where does finished goods flow into

cost of goods sold

product of the number of partially completed units and the percentage completion of those units

equivalent units

journal entry transfer the cost of completed units in dept b to finished goods

finished goods 50 credit wip dept b 50

in process costing manufacturing overhead costs are generally applied how

generally applied using a predetermined overhead rate

department where work is performed on a product and where materials labor or overhead costs are added to he product

processing department

how does direct labor costs compare in size to other perodcut cost in process cost system

smaller

in process costing, manufacturing overhead costs are distributed to each department according to what

the amount of the allocation base incurred in the department

what do the partially completed units (equivalent units) complicate

the determination of departments output for a given period and the unit cost that should be assigned to that input

what is the key difference between process and job order costing

under process costing, it makes no sense to try to identify materials, labor and overhead costs with a particular customer order

journal entry applied manufacturing overhead cost record overhead cost applied

wip dept a 50 wip dept b 50 credit moh 100

journal entry transfer the cost of partially completed units from dept a to dept b

wip dept b 50 credit wip dept a 50

when using process costing each processing department has a separate ______________ account

work in process

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

(3650 + 5000)/ 250

equation for cost per equivalent unit

(cost of beg wip + costs added to production)/ eu of p

on a cost recon what goes in the cost to be accounted for

- cost of beg wip inventory (add the numbers they give you together - materials + conversion) - cost added to production (add the numbers they give you together- materials+conversion) (add these together)

for the current period, hones started 15000 units and completed 10000 units, leaving 5000 units in process 30 percent complete. how many equivalent units of production did jones have for the period

10000 + (5000 + .30) = 11500 equivalent units

equation for the wighted average method

equivalent units of production (eu of p)= units completed and transferred + equivalent units in ending wip inventory

equation for the cost of the end wip inventory

eu in end wip * cost per eu

in job order cost system costs are traced and applied to what

individual jobs

process costing accumulates costs by ______

department

in processing costing system cost are traced and applied to what

departments

conversion costs are what

direct labor plus manufacturing overhead

to report ending inventory partially completed units are translated into what

equivalent units

Equivalent units of production under the weighted-average method equals

equivalent units in ending work I process plus units transferred out

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

false

when is process costing used

in industries that convert raw materials into homogeneous products

what does the weighted average method for calculating equivalent units do

makes no distinction between work done in prior or current periods blends together units and costs from prior and current period

the journal entry to record actual moh

moh credit accounts payable

journal entry actual moh cost

moh 50 credit accounts payable 50

when calculating the eu of p and are plugging in the end wip inv what do you need to make sure to do

multiply the units * percent completed

how does processing department work with making potato chips

one for preparing potatoes one for cooking one for inspecting and packaging

true or false costs are accumulated by department in a process costing system

true

equation for the cost of units completed/transferred

units completed/transfered. * cost per eu

journal entry direct material cost- record the raw material used

wip dept a 50 wip dept b 50 credit raw material 100

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 Blank______.

wip dept b

is the cash flow in a process cost flow the same as in a process costing system

yes

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

300 * .40 = 120

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 $

(4500+37800)/ 7050= 6

what is the basic purpose of job-order casting and process costing

assign and compute product costs

the flow of costs in a job-order costing system what is different then a regular flow of costs

dm dl and moh goes into jobs

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 Blank______

300* .3= 90 +200 + 4000= 4290

how to make a cost reconciliation report

put a header cost to be accounted for: - cost of beg wip inventory (add the numbers they give you together - materials + conversion) - cost added to production (add the numbers they give you together- materials+conversion) (add these together) cost accounted for as follows: - cost of end wip inventory - cost of units completed/trans (add these together) two columns should be equal

process costing is used for products that are:

similar and produced continuously

the equivalent units completed are valued the same as units _______ for purposes of determining the cost per unit

transferred out

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

true

on a cost recon what goes in to the cost accounted for as follows

- cost of end wip inventory - cost of units completed/trans (add these together)

steps of process costing

1. calculate eu of p 2. cost per equivalent unit 3. applying cost- weighted average method 4. prepare a cost reconciliation report

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 Blank______.

100 * .40 =40 40+ 2000= 2040

to calculate cost per equivalent unit using the weighted average method, add the cost of _________ work in process inventory costs added during the period and divide by equivalent units of production

beginning

what are the similarities between job- order and process costing

both assign material, labor and OH to products and provide a mechanism for computing unit product costs both use the same manuf. accounts. (moh, R/m WIP and F/G) the flow of costs is basically the same

Costs per equivalent unit are used to value

both ending inventory and units transferred to the next department

header information on a reconciliation report

assembly department cost recon June ____

in the flow of materials, labor and overhead cost (general) what flows into wip

direct materials direct labor manufacturing overhead

what cost categories do we most commonly use in process costing

direct materials and conversion

what does the flow of costs in a processing costing system look like

dm dl and moh go into processing department

how is a process cost flow different then other methods

each department has a separate wip account

when computing the equivalent units of prodction under the weighted average method, the fact that the units in the __________ were partially complete with respect to materials and conversion is ignored

ending wip inventory

when you are applying costs what costs are you calculating

ending wip inventory and units transferred out

in the flow of materials, labor and overhead cost (general) where does wip flow into

finished goods

once produit on is completed in all processing departments, production costs are transferred to

finished goods

key difference between process and job-order costing

under process costing it makes no sense to try to identify materials, labor and overhead costs with a particular customer order

using the weighted average method, how do you calculate equivalent units of production

units transferred/completed + equivalent units in end wip

equation to calculate units transferred to the next department if not provided

until completed/ transferred= big win units + units added - end wip units

how is proces costing different then job. order

used when. single product is produced for long period of time accumulate costs by department compute unit costs by department

journal entry direct labor cost record labor costs

wip dept a 50 wip pet b 50 credit salaries and wages payable 100