Chapter 16 videos

The journal entry to record the use of utilities in a factory includes which of the following:

A) Debit to Factory Overhead D) Credit to Factory Utilities Payable

Direct materials, direct labor, and overhead costs are commonly associated with which production system?

Both job order and process systems

What is the best rationale for why many companies use a hybrid costing system?

Companies are increasingly trying to standardize processes while attempting to meet individual customer needs.

The journal entry to purchase materials on credit for factory use includes which of the following?

Debit to Raw materials inventory and Credit to Accounts Payable.

The journal entry to transfer completed products from production to finished goods inventory includes which two of the following?

Debit to finished goods inventory Credit to work in process inventory

The journal entry to assign costs of direct labor used in production includes which two of the following?

Debit to work in progress inventory Credit to factory wages payable

In Step 4, the EUP from Step 2 and the cost per EUP from Step 3 are used to assign costs to the:

In Step 4, the EUP from Step 2 and the cost per EUP from Step 3 are used to assign costs to the units completed and transferred to finished goods; units in ending work in process inventory.

A trend where inventory levels can be minimal and raw materials are not ordered or received until needed is called:

Just-in-time Production

Step 3 in FIFO process costing is to determine:

cost per equivalent unit

The FIFO method assigns costs to units assuming a _____ flow of product.

first-in, first out

Step 1 in FIFO process costing is to determine:

physical flow of units

The mass production of similar products in a continuous flow of sequential processes is referred to as ________ operations.

process

Raw materials which will be used as direct materials are initially included in

raw materials inventory.

The total number of physical units to account for equals the:

total number of units accounted for.

The cost of the beginning work in process inventory was comprised of $3,000 of direct materials, $10,000 of direct labor, and $10,000 of factory overhead. Costs incurred during the period were comprised of $15,000 of direct materials costs, and $100,000 of conversion costs. The equivalent units of production (EUP) for the period were 9,000 for direct materials and 6,000 for conversion. The costs per EUP were:

$2.00 per EUP for direct materials and $20.00 per EUP for conversion. ***Cost per EUP for direct materials = (Direct materials cost in beginning work in process inventory of $3,000 + Direct materials cost incurred of $15,000) ÷ 9,000 EUP = $2.00 per EUP. Cost per EUP for conversion = (Direct labor cost in beginning work in process inventory of $10,000 + Factory overhead cost in beginning work in process inventory of $10,000 + Conversion cost incurred of $100,000) ÷ 6,000 EUP = $20.00 per EUP.

Assume that Delaware Ice Cream Company uses the FIFO method to calculate equivalent units. It has unit costs of $10 for materials and a conversion cost of $30. There are 2,500 units in ending goods in process, 100 percent complete with respect to materials and 40 percent complete with respect to conversion. What is the total cost assignable to its ending work in process inventory?

$55,000 Cost assignable to ending Work in process inventory = Materials cost of $25,000 (or 2,500 units × 100% × $10 per EUP) + Conversion cost of $30,000 (or 2,500 units × 40% × $30 per EUP) = $55,000.

The process cost report summary summarizes:

-physical flow of units -equivalent units of production -costs per equivalent unit of production -assignment of total costs to units worked on in the period

During the current year, a manufacturing company had the following activity. 1. Units in beginning work in process: 10,000 at 70% complete. 2. Units started into production: 150,000. 3. Units completed during the year: 140,000. 4. Units in ending work in process: 20,000 units at 25%. What is the number of equivalent units using the FIFO method?

138,000 ****Equivalent units using FIFO = Beginning work in process of 3,000 units (or 10,000 units × (100% − 70% complete)) + Units started and completed of 130,000 (or 140,000 completed − 10,000 in beginning inventory) + Ending work in process of 5,000 (or 20,000 units × 25% complete) = 138,000.

During the period, the Mixing Department completed 500 units and transferred them out to the Baking Department. At the end of the period, there were 4,000 units that are 40% complete as to direct materials in the Mixing Department. The equivalent units of production for direct materials equal:

2,100 EUP. *** Equivalent units of production (EUP) for direct materials = Equivalent units completed and transferred out of 500 (or 500 × 100%) + Equivalent units for ending goods in process of 1,600 (or 4,000 × 40%) = 2,100 EUP.