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Exam 21: Costing Systems Process Costing

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Question 21

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Which method assumes that all units in beginning work in process (WIP) are completed in the current period?

A) LIFO
B) Average cost
C) FIFO
D) Direct

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

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Question 22

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If 45,000 units of ending work in process inventory are 60 percent complete as to conversion costs, 27,000 equivalent units of conversion costs must be incurred to complete these units during the next period.

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B) False

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Question 23

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Process costing is applicable to production operations that

Equivalent production is also called

Production processes that lend themselves to the use of process cost analysis usually have a FIFO product flow within the process.

The average process costing method disregards the ending inventory assuming that direct material costs and conversion costs are pertaining to the immediate next period.

The Taylor Company uses a process costing system. Assume that direct materials are added at the beginning of the period and that direct labor and overhead are added continuously throughout the process. The company uses the FIFO costing method. The following data are available for one of its accounting periods Equivalent units for conversion costs are

Which of the following products probably would be produced by a company using a process costing system?

Blackwell Corporation uses a process costing system and has just completed production for the month of December 20xx. The following production data were obtained from the accounting records: a. Units in beginning inventory totaled 9,000 and were 80 percent complete as of December 1 (all direct materials were added to these products in the preceding month). b. During the period, 216,000 units were started. c. 17,400 units were partially completed as of December 31, 20xx. d. Ending work in process inventory was 100 percent complete with respect to direct materials and 70 percent complete with respect to conversion costs at month end. Using the information provided, compute the equivalent units of production for direct materials and conversion costs for the month ended December 31, 20xx, assuming a FIFO costing flow.

The Taylor Company uses a process costing system. Assume that direct materials are added at the beginning of the period and that direct labor and overhead are added continuously throughout the process. The company uses the average costing method. The following data are available for one of its accounting periods: Assume that you have calculated a direct materials cost per unit of $5 and a conversion cost per unit of $8. Under this assumption, the ending balance for Work in Process Inventory would be

Information for the current month for Process D is shown below. Units completed-72,000 Units in ending work in process inventory-5,000 Direct materials are added at the beginning of the process. Beginning work in process is 50 percent complete as to conversion costs; ending work in process inventory is 40 percent complete. Determine the cost of ending work in process inventory.

Information for the current month for Process 3 is shown below. Units completed-60,000 Units in ending work in process-6,000 Direct materials are added at the beginning of the process. Beginning work in process is 30 percent complete as to conversion costs; ending work in process inventory is 50 percent complete. The cost of ending work in process inventory totaled

Total product costs for the period include direct materials, direct labor, and overhead.

Susan's Plastics, Inc., manufactures a line of office desk accessories. The company's newest and most popular product is a plastic paper holder for holding the paper up while working at the computer. Production began on February 1, 20xx. Plastic is poured into molds to form the product, and the entire process takes place in the Molding Department. After the liquid plastic is poured (signifying the beginning of the process), the molds must be cooled slowly before the paper holder is separated from the mold. Statistics for 20xx are shown below. Ending work in process inventory: All direct materials were added at the beginning of the process, and the average stage of completion of these units as to conversion costs is 80 percent. No units were lost or spoiled during the year. a. a. Prepare a process cost report using the FIFO costing method for the Molding Department using five steps. Include T accounts to recap both costs and units for the Work in Process Inventory account. b. Identify the amount to be transferred out of Work in Process Inventory and prepare the necessary entry in journal form to do so. b. Transfer $_________ to __________ and prepare the necessary journal entry in good form to make the transfer.

Nader, Inc., has the following information available: At the beginning of the period, there were 500 units in process that were 40 percent complete as to conversion costs and 100 percent complete as to direct materials costs. During the current period, 4,300 units were started and completed. Ending inventory contained 320 units that were 80 percent complete as to conversion costs and 100 percent complete as to direct materials costs. (Assume that the company uses the FIFO costing method.) The cost of completing a unit during the current period was

Direct materials costs and conversion costs for the current period on a process cost report are divided by their respective units of equivalent production to arrive at the

Use the following data from a company using a process costing system to answer the question below. The company uses average process costing method. Equivalent units for direct materials during the month totaled

The most commonly used method to assign costs to products in process costing is the FIFO costing method.

Use the following information to perform the calculations requested below, assuming that the average costing approach to a process costing system is being used. Beginning work in process inventory: 6,000 units, 100 percent complete as to direct materials, 75 percent complete as to conversion costs Ending work in process inventory: 18,000 units, 100 percent complete as to direct materials, 65 percent complete as to conversion costs Units started during the month: 44,000 a. Calculate units completed and transferred out during the month. b. Calculate units to be accounted for during the month. c. Calculate equivalent units for conversion costs. d. Calculate equivalent units for direct materials.

Which of the following is not included in conversion costs?