Managerial Accounting Ch 4 Presentation

Which of the following statements about processing costing is false? • Process costing accumulates costs by department. • Process costing assigns departmental costs uniformly to all identical units that pass through the department during a period. • Process costing systems compute unit costs by department. • Process costing is used when a company produces a continuous flow of units that are distinguishable from one another. •

Process costing is used when a company produces a continuous flow of units that are distinguishable from one another.

What is the number of equivalent units of production with respect to materials during the period?

Beginning work in process inventory 200 units 55% materials 60% conversion Units started into production during the period 3000 units Units transferred out during the period 2600 units Ending work in process inventory 600 units 25% materials 40% conversion 2600 + 600(0.25) = 2750

Equivalent units is computed using which of the following formulas?

Equivalent units = Number of partially completed units x Percentage completion

Which of the following statements about companies that use processing costing is false? • A processing department is an organizational unit where work is performed on a product and where materials, labo overhead costs are added to the product. • Costs are accumulated by department. • Raw material costs are added only to the first processing department. • A separate Work in Process account is maintained for each processing department.

Raw material costs are added only to the first processing department.

Consider the following information from the records of Bennington Corporation. The company uses the weighted-average method. Equivalent units of production 1670 materials 1660 conversion Costs of beginning work in process $250 materials $350 conversion Costs added during the period $2255 materials $3385 conversion When computing the cost per equivalent unit for conversion, what is the total cost that will be included in the numerator of that calculation? What is the cost per equivalent unit for conversion?

Cost per equivalent unit = (cost of beginning work in process inventory + cost added during the period) / equivalent units of production numerator = 350 + 3385 = $3735 3735 / 1660 = $2.25

A company has three processing departments: Mixing, Baking, and Packaging. The Baking Department transfers 500 units to the Packaging Department. How will the Packaging Department account for the costs of those 500 units?

Costs transferred in

Consider the following information from the records of Willette Corporation. The company uses the weighted-average method. Equivalent units in ending work in process for materials 1500 Equivalent units in ending work in process for conversion 1300 Units transferred out during May 8500 Cost per equivalent units for materials $4 Cost per equivalent units for conversion $3 What is the Bottling Department's cost of ending work in process inventory? What is the cost of the units transferred out of the Bottling Department during May?

cost of ending work in process inventory = 9900 (1500)(4) = 6000 (1300)(3) = 3900 6000 + 3900 = 9900 cost of units transferred out during May = $59,500

Conversion cost is composed of _____.

direct labor cost and manufacturing overhead cost

Sneaker Styles Company manufactures a wide variety of sneakers. Which of the following systems is most suitable for Sneaker Styles?

operation costing

The cost of beginning work in process inventory plus the costs added to production during the period equals the _____

total cost to be accounted for

For each of the five transactions described below, use the dropdown boxes to indicate which account should be debited and which account should be credited.

Transaction 1. Raw materials worth $12,000 were issued for use in the Cutting Department. Debit: Work in Process - Cutting Credit: Raw Materials 2. Manufacturing overhead was applied to the Shaping Department, $10,000. Debit: Work in Process - Shaping Credit: Manufacturing Overhead 3. Unshaped, cut snowboards worth $60,000 were transferred from the Cutting Department to the Shaping Department. Debit: Work in Process - Shaping Credit: Work in Process - Cutting 4. Finished snowboards worth $80,000 were transferred from the Shaping Department to the finished goods warehouse. Debit: Finished Goods Credit: Work in Process - Shaping 5. Finished snowboards that cost $100,000 were sold to customers. Debit: Cost of Goods Sold Credit: Finished Goods