Chapter 4 Process Costing

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

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

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

When computing the equivalent units of production under the weighted-average method, partially completed ______ inventory is ignored.

beginning WIP

Costs per equivalent unit are used to value

both units in ending inventory and units transferred to the next department

Direct labor + Manufacturing overhead = ______ cost

conversion

The two equivalent unit figures that are most often computed in process costing are for materials and ______.

conversion

Equivalent units of production can be computed using:

either the weighted-average or FIFO method

A processing department produces ______ units

homogeneous identical

Industries/products more suitable for process costing than job-order costing include

paper towels breakfast cereal sunscreen

Which method is used when equivalent units and unit costs relate only to work done during the current period?

FIFO

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

When using process costing, materials, labor and overhead may be added in ______ processing department.

any

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

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

To report ending inventory, partially completed units are translated into ______ units

equivalent

Number of partially completed units x Percentage completion = ______ ______

equivalent units

When production is completed in the last processing department, units are transferred to the ______ ______ account.

finished goods

Job cost sheets are used to accumulate costs when ______ ______ costing.

job order

The two most commonly used methods for determining unit product costs are ______-______ and ______ costing.

job-order, process

The weighted average method includes costs for

prior and current periods

In the ______ costing system, transferred in costs are treated as just another category of costs, like materials or conversion costs.

process

Work is performed on products, and materials, labor, and overhead costs are added to products in a(n) ______ department.

processing

When many different jobs or products are worked on each period, the most likely costing system used is:

job-order

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

Differences between job-order costing and process costing include that product costing:

accumulates costs by department is used for indistinguishable products

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

______-______ costing is used for many different products with unique production requirements.

job-order

The journal entry to record direct materials costs in processing Department #1 is to debit:

WIP-Department #1 and credit Raw Materials

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

Costs ______ in are treated as another category of cost, just like materials or conversion costs.

transferred

The equivalent units completed are treated the same as units ______ out for purposes of determining the cost per unit.

transferred

When unit costs are transferred from Department A to Department B, Department B will treat the costs as:

transferred in

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

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

If WIP contains 300 units that are 40% complete the number of equivalent units is:

120

When ending WIP contains 500 units that are 34% completed there are ______ equivalent units.

170

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

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

Both process costing and job-order costing assign which of the following costs to products?

Labor Materials Manufacturing overhead

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

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

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

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

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

In process costing, manufacturing overhead costs are distributed to each department:

according to the amount of the allocation base incurred in the department