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Exam 18: Costing Systems- Process Costing

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Question 1

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Production has just been completed for January 20xx by Colombo,Inc.The company utilizes a process costing system,and the following accounting and operating information was obtained from company records: a. Beginning work in process inventory consisted of units totaling 8,200 that were 60 percent complete as of January 1, 20xx (all direct materials were added to the units at the beginning of the production process that took place in the preceding month). b. 260,000 units were started during January. c. At the end of the month, 22,400 units were in work in process inventory and were 100 percent complete with respect to direct materials and 40 percent complete with respect to conversion costs. From the figures shown above, and assuming a FIFO costing flow, prepare in good form a schedule of equivalent production for the month ended January 31, 20xx.

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Question 2

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In a process costing system,percentage-of-completion factors normally are obtained from

A) accounting records.
B) job order cost cards.
C) supervisors in the production departments.
D) time cards.

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

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Question 3

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In process costing,all costs incurred by a department or production process are divided by the equivalent units produced during the period to determine the average cost per unit produced.

Use the following data from a company using a process costing system to answer the question(s) below. Beginning Work in Process Inventory on June 1 : 1,000 units - 100 percent complete as to direct materials 80 percent complete as to conversion costs Units Started During June: 6,500 units Ending Work in Process Inventory on June 30: 1,200 units - 100 percent complete as to direct materials 40 percent complete as to conversion costs The FIFO process costing method is used by the company. Equivalent units for conversion costs during the month totaled

Under the FIFO cost flow assumption,separate unit cost analyses are not used for each accounting period because costs of different periods are averaged.

Average cost method assigns an average cost to all products made during an accounting period

During March,Department A started 300,000 units of product in a particular production process.The beginning work in process inventory was 50,000 units,and the ending inventory was 40,000 units.Direct materials are introduced at the start of processing,and beginning and ending inventories are considered to be 40 percent complete with respect to conversion costs.Department A uses the FIFO costing method. The number of equivalent units produced with respect to conversion costs was

Montell Inc.produces a variety of outdoor equipment products and utilizes a process costing system.The following information was provided by the accounting department as of March 31,20xx: a. Units started during the month of March totaled 314,000. b. Units partially complete as of March 31 equaled 76,000. c. Ending work in process inventory as of March 31, 20xx, was 80 percent complete. d. Direct materials are added at the beginning of the process, and conversion costs are incurred uniformly throughout the process. e. No units were in process on March 1, 20xx. Using the information provided, compute the equivalent units of production for direct materials and conversion costs for the month ended March 31, 20xx, assuming a FIFO costing flow.

Data for Orlando Company for the month of June 20xx are as follows: $\begin{array}{ll}\text { Beginning work in process inventory: } & \text { Operations for the month of June: } \\\text { Units - } 800 & \text { Units started-14,000 } \\\text { Direct materials }-100 \% \text { complete } & \text { Direct materials costs- } \$ 57,400 \\\text { Conversion costs- } 70 \% \text { complete } & \text { Conversion costs- } \$ 50,122\\\text { Direct materials costs -\$ 2,860 }\\\text { Conversion costs- \( \$ 2,150 \)}\\\text { Ending work in process inventory:}\\\text { Units - 1,500}\\\text { Direct materials \( -100 \% \) complete}\\ \text { Conversion costs- \( 30 \% \) complete}\end{array}$ Assume the company uses a FIFO flow of costs. a. Prepare a process cost report for July. b. Identify the amount that should be transferred out of the Work in Process Inventory account, and state where those dollars should be transferred.

A company that manufactures potato chips would probably use a process costing system.

When the FIFO cost flow assumption is used,the equivalent units will always equal the actual units in beginning work in process inventory,plus the actual units started and completed during the current period plus the percent of ending work in process inventory completed during the current period.

Process costing information can inform managers about the amounts and types of products ordered by specific customers.

Conversion costs are defined as the combined total of direct materials costs and direct labor costs incurred by a production department.

It is not necessary to ascertain the portion of ending Work in Process Inventory applicable to direct materials costs versus conversion costs.

A company should use process costing rather than job order costing if

Use the following data from a company using a process costing system to answer the question below. Beginning Work in Process Inventory on June 1 : 1,000 units - 100 percent complete as to direct materials 80 percent complete as to conversion costs Units Started During June: 6,400units Ending Work in Process Inventory on June 30: 1,200 units - 100 percent complete as to direct materials 40 percent complete as to conversion costs The company uses average process costing method. Equivalent units for direct materials during the month totaled

The FIFO process costing method assumes that the items in ending work in process inventory were started and completed during the current period.

Which of the following is not a characteristic of a process costing system?

Process costing is applicable to production operations that

The Bakersfield Company has the following information available: $\begin{array}{lrr}&\text { Costs from Beginning}&\text { Costs from}\\&\text { Inventory}&\text { Current Period}\\\text { Direct materials } & \$ 3,650 & \$ 31,620 \\\text { Conversion costs } & 9,120 & 143,100\end{array}$ At the beginning of the period,there were 800 units in process that were 60 percent complete as to conversion costs and 100 percent complete as to direct materials costs.During the current period,5,800 units were started and completed.Ending inventory contained 400 units that were 60 percent complete as to conversion costs and 100 percent complete as to direct materials costs.(Assume that the company uses the FIFO process costing method.) The cost of completing a unit during the current period was