Accounting II Chapter 18

During July, the equivalent units of direct materials added to the product worked on by Department A amounted to a total of 90,000 applied as follows: beginning inventory, 20,000 units; units started and completed in July, 60,000 units; and ending inventory, 10,000 units. Assuming that the cost of direct materials requisitioned by the department in July was $135,000; the amount of the materials cost to be assigned to the ending inventory would be: (Do not round intermediate calculations.)

$15,000. (10,000 ÷ 90,000) × $135,000 = $15,000

For the month of December, its first month of operations, the Radcliffe Corporation completed and transferred 800 units of product costing $80,000 to produce to Finished Goods Inventory. If Radcliffe sold 650 units during the same month, how much was cost of goods sold for the same period?

$65,000 $80,000 ÷ 800 = $100 unit cost × 650 units sold = $65,000

If 8,000 units were in beginning inventory, 26,000 units were started, and 6,000 units were in the ending inventory, how many units were transferred out?

28,000 units 8,000 + 26,000 - 6,000 = 28,000

If beginning inventory in Work in Process is zero, 2,000 units are started during the period, and 1,700 units were completed and transferred out, how many units remain in ending inventory?

300 units 0 beginning inventory + 2,000 units started - 1,700 completed and transferred out = 300 ending inventory

Equivalent units of production are:

A measure representing the percentage of a unit's cost that has been completed.

Process costing does not:

Apply overhead using an activity base.

Process costing systems:

Are used when companies produce homogeneous units.

To identify the cause of a change in a product total unit cost, management may:

Compute per unit product cost for each individual production department.

Which of the following is not a characteristic of a process costing system?

Costs are accumulated separately for each unit of production as it moves through the factory.

Companies that compute equivalent units of production do so to:

Determine departmental per-unit costs.

Equivalent units are usually computed for:

Direct materials, direct labor, and factory overhead costs.

In most process costing systems, per-unit costs are determined by:

Dividing the total manufacturing costs incurred during the period by the equivalent number of units completed during the period.

The number of equivalent units of production:

May be less than, equal to, or greater than the number of physical units completed during the period.

A process costing system differs from a job order costing system in that:

Process costing systems are used when production involves large volumes of standardized products, whereas job order costing systems are used when each job or batch of products is uniquely different.

A summary of work completed with related unit and total costs in a process costing system is called a(n):

Production cost report.

In either a job order or a process costing system, credits to the Materials Inventory account represent:

The cost of materials placed into production.

A typical production cost report will contain all of the following except:

The costs assigned to each job.

For which of the following categories is it not important to know the number of units?

The number of units completed during the period.

Which company would most likely not use a process costing system?

Tiffany Jewelers

In a process costing system, the number of units started and completed for a period is equal to:

Units transferred out less units in beginning work in process.

Equivalent units of production represent units of:

Work performed during the period.