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Exam 17: Process Costing

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Question 1

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Comfort chair company manufacturers a standard recliner. During February, the firm's Assembly Department started production of 73,900 chairs. During the month, the firm completed 78,400 chairs, and transferred them to the Finishing Department. The firm ended the month with 11,200 chairs in ending inventory. There were 15,700 chairs in beginning inventory. All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process. The FIFO method of process costing is used by Comfort. Beginning work in process was 25% complete as to conversion costs, while ending work in process was 70% complete as to conversion costs. How many of the units that were started and completed during February?

A) 85,100
B) 78,400
C) 73,900
D) 62,700

E) A) and C)
F) A) and B)

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D

Question 2

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In hybrid-costing systems, managers use process costing to account for the conversion costs and job costing for the material and customizable components.

A) True
B) False

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Question 3

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Both, the standard-costing method and FIFO, assumes that the earliest equivalent units in beginning work in process are completed first.

There are basically two distinct methods of calculating product costs. Required: Compare and contrast the two methods.

Estimating the degree of completion for the calculation of equivalent units is usually easier for conversion costs than it is for direct materials.

The weighted-average method merges unit costs from different accounting periods, obscuring period-to-period comparisons.

Otylia Manufacturing Company assembles its product in several departments. It has two departments that process all units. During February, the beginning work in process in the cutting department was half completed as to conversion, and complete as to direct materials. The beginning inventory included $12,000 for materials and $3,000 for conversion costs. Ending work-in-process inventory in the cutting department was 40% complete. Direct materials are added at the beginning of the process. Beginning work in process in the finishing department was 75% complete as to conversion. Beginning inventories included $16,000 for transferred-in costs and $20,000 for conversion costs. Ending inventory was 25% complete. Additional information about the two departments follows: Required: Prepare a production cost worksheet using weighted-average for the cutting department.

Shiffon Electronics manufactures music player. Its costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department, the Programming department, and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Shiffon Electronics uses weighted-average costing. The following information is available for the month of March 2017 for the Assembly department. What amount of direct materials costs is assigned to the ending Work-in-Process account for March? (Round intermediary calculations to the nearest whole dollar.)

Timekeeper Inc. manufactures clocks on a highly automated assembly line. Its costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Timekeeper Inc. uses weighted-average costing. What amount of conversion costs is assigned to the ending Work-in-Process account for June? (Round any intermediary calculations to the nearest cent.)

Timekeeper Inc. manufactures clocks on a highly automated assembly line. Its costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Timekeeper Inc. uses weighted-average costing. What is the conversion cost per equivalent unit in June?

Weighted-average cost per equivalent unit is obtained by dividing the sum of costs for beginning work in process plus costs for work done in the current period by total equivalent units of work done to date.

Jane Industries manufactures plastic toys. During October, Jane's Fabrication Department started work on 10,000 models. During the month, the company completed 11,300 models, and transferred them to the Distribution Department. The company ended the month with 2000 models in ending inventory. There were 3300 models in beginning inventory. All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process. The FIFO method of process costing is being followed. Beginning work in process was 30% complete as to conversion costs, while ending work in process was 55% complete as to conversion costs. What were the equivalent units for conversion costs during October?

Timekeeper Inc. manufactures clocks on a highly automated assembly line. Its costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Timekeeper Inc. uses weighted-average costing. What is the direct materials cost per equivalent unit during June?

Sodius Chemical Inc. placed 220,000 liters of direct materials into the mixing process. At the end of the month, 5,000 liters were still in process, 30% converted as to labor and factory overhead. All direct materials are placed in mixing at the beginning of the process and conversion costs occur evenly during the process. Sodius uses weighted-average costing. Required: a.Determine the equivalent units in process for direct materials and conversion costs, assuming there was no beginning inventory. b.Determine the equivalent units in process for direct materials and conversion costs, assuming that 12,000 liters of chemicals were 40% complete prior to the addition of the 220,000 liters.

Which of the following is true of weighted-average process-costing?

Conversion costs include direct materials and direct labor but excludes all other manufacturing and non-manufacturing costs.

Morgan Clay Products manufactures clay molded pottery on an assembly line. Its standard costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Molding Department and the Finishing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Which of the following journal entries records the Molding Department's conversion costs for the month, assuming conversion costs are 20% higher than expected?

Which of the following best describes transferred-in costs in process costing?

Timekeeper Inc. manufactures clocks on a highly automated assembly line. Its costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Timekeeper Inc. uses weighted-average costing. What are the equivalent units for direct materials and conversion costs, respectively, for June? (Round final answers to the nearest unit.)

Under the weighted-average method, how would you calculate the cost per equivalent units with regards to conversion costs?