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Exam 20: Process Costing

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Question 21

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During August,the Filtering Department of Olive,Inc.had beginning Work-in-Process inventory of 180 units with costs of $50,000.595 units were transferred in during the month.It had 100 units in ending Work-in-Process Inventory.Under the first-in,first-out (FIFO) method,current period equivalent units of production for transferred in units in beginning Work-in-Process Inventory of the Filtering Department is ________.

A) 0 units
B) 595 units
C) 180 units
D) 100 units

E) B) and D)
F) None of the above

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Question 22

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The first-in,first-out (FIFO) method creates better month-to-month cost comparisons than the weighted-average method ________.

A) because it does not recognize transferred in units from other processes
B) when there are substantial quantities of units in process at the end of the period
C) because it merges costs from the prior period with the current period
D) because it is used by industries that do not experience significant cost changes

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

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Question 23

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Under a process costing system,direct labor costs are assigned to the Work-in-Process Inventory account of the department for which they are incurred.

The production cost report for Department 2 shows that $453,000 was assigned to the 58,000 units transferred to Finished Goods Inventory.This cost assigned to Finished Goods Inventory is recorded with a debit to Work-in-Process-Department 2.

In process costing,factory rent and utilities are debited to the ________.

Caldwell,Inc.has two processes-Coloring Department and Mixing Department.The company sold 450 gallons on account at $110 per gallon.The total cost of processing was $385,000 for 5,500 gallons of paint.Throughout the year,the company used a predetermined overhead allocation rate to allocate $80,000 and $90,000 of indirect costs to the Coloring Department and Mixing Department,respectively.The actual overhead costs incurred amounted to $150,000 at the end of the year.What are the journal entries to record the sale of goods and the adjustment for over/underallocated manufacturing overhead at the end of the year if the company follows a process costing system?

In a process costing system,costs can be controlled with the aid of a production cost report.

A production cost report provides inventory and cost of goods sold data that are needed for the balance sheet.

When finished products are sold,Sales Revenue is debited,and Cost of Goods Sold is credited.

Story Manufacturing produces a chemical pesticide and uses process costing.There are three processing departments-Mixing,Refining,and Packaging.On January 1,the first department-Mixing-had a zero beginning balance.During January,42,000 gallons of chemicals were started into production.During the month,33,000 gallons were completed,and 9,000 remained in process,partially completed.In the Mixing Department,all direct materials are added at the beginning of the production process,and conversion costs are applied evenly through the process. During January,the Mixing Department incurred $60,000 in direct materials costs and $250,000 in conversion costs.At the end of the month,the ending inventory in the Mixing Department was 60% complete with respect to conversion costs.First,calculate the equivalent units,then calculate the cost per equivalent unit,and then calculate the total cost of the product that was completed and transferred out during January.The weighted-average method is used. The total cost of product transferred out was ________.(Round any intermediate calculations two decimal places,and your final answer to the nearest dollar.)

A process costing system is generally used by companies that produce homogeneous products.

Which of the following statements correctly describes the term "conversion costs"?

Which of the following statements is true of process costing?

Production cost reports prepared using the first-in,first-out (FIFO)method assume that the first units started in the production process are the first units completed and transferred out.

Provide the formula for (1)To account for and (2)Accounted for.

Companies that manufacture identical items through a series of uniform production steps use ________ to determine cost per unit sold.

The production cost report for Department 2 shows that $452,000 was assigned to the 57,000 units transferred to Finished Goods Inventory.Cost of goods sold equals $452,000.

The cost per equivalent unit for transferred in units is calculated by dividing total transferred in costs by the equivalent units of production for transferred in units.

If a business operates in an industry that experiences significant cost changes,should the business prepare its production cost report using the FIFO method or the weighted-average method? Explain your answer.

In a production cost report,the number of total units to account for consists of ________.The weighted-average method is used.