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Exam 20: Process Cost Systems

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Question 1

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Information for Nichols Manufacturing Company for the month of May is as follows:Beginning work in process:Cost of inventory at process, May 1$5,010Units, 800Direct materials, 100% completeConversion costs, 70% complete?Units started in May, 14,000Costs charged to Work in Process during May:Ending work in process inventory:Direct materials costs, $57,400Units, 1,500Direct labor costs, $20,049Direct materials, 100% completeFactory overhead costs, $30,073Conversion costs, 30% complete?Prepare a cost of production report for the month of May, using the FIFO method.

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?Nichols Manufacturing Company...

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Question 2

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The closer a company moves toward lean manufacturing processing, the more differences in unit costs between average costing and FIFO will be reduced.

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Question 3

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In a process cost system, the cost of completed production in Department A is transferred to Department B by which of the following entries?

According to lean manufacturing,

One of the primary uses of a cost of production report is to assist management in controlling production costs.

The number of equivalent units of production for the period for materials if the first-in, first-out method is used to cost inventories was

Use this information about Department J to answer the questions that follow. ​ Department J had no work in process at the beginning of the period. 18,000 units were completed during the period, and 2,000 units were 30% completed at the end of the period. The following manufacturing costs were debited to the departmental work in process account during the period (assume the company uses FIFO and rounds cost per unit to two decimal places) : ​​ $\begin{array} { l r } \text { Direct materials } ( 20,000 \text { at } \$ 5 ) & \$ 100,000 \\\text { Direct labor } & 142,300 \\\text { Factory overhead } & 57,200\end{array}$ -Assuming that all direct materials are placed in process at the beginning of production, what is the total cost of the departmental work in process inventory at the end of the period?

The debits to Work in Process-Assembly Department for May, together with data concerning production, are as follows:​ ​All direct materials are placed in process at the beginning of the process, and the first-in, first-out method is used to cost inventories. The materials cost per equivalent unit for May is

The number of equivalent units of production for material costs for the period was

Process and job order cost systems are similar in all of the following ways except

If 10,000 units that were 50% completed were in process on November 1, 90,000 units were completed during November, and 20,000 units were 20% completed on November 30, the number of equivalent units of production for November was 90,000. (Assume no loss of units in production and that inventories are costed by the first-in, first-out method.)

Which of the following measures would not help managers to control and improve operations?

The journal entry to record the flow of costs into Department 2 during the period for direct materials is

Match each phrase that follows with the term (a-e) it describes. -Provides information for controlling and improving operations

Use this information about Super Co. to answer the questions that follow. ​ The following unit data were assembled for the assembly process of Super Co. for the month of April. Direct materials are added at the beginning of the process. Conversion costs are added uniformly over the production process. The company uses the FIFO method.​ ​ -The number of equivalent units produced with respect to direct materials costs is

All of the following are characteristics of a process cost system except

Match each phrase that follows with the term (a-h) it describes. -Measure of the work done during a production period, expressed in terms of fully complete units of output

If a department that applies FIFO process costing starts the reporting period with 50,000 physical units that were 25% complete with respect to direct materials and 40% complete with respect to conversion, it must add 12,500 equivalent units of direct materials and 20,000 equivalent units of direct labor to complete them.

The estimated total factory overhead cost and total machine hours for Department 40 for the current year are $250,000 and 56,250, respectively. During January, the first month of the current year, actual machine hours used totaled 5,100 and factory overhead cost incurred totaled $22,000. (a)Determine the factory overhead rate based on machine hours. (b)Prepare the journal entry to apply factory overhead to production in Department 40 for January. (c)What is the balance of Factory Overhead-Department 40 at January 31? (d)Does the balance of Factory Overhead-Department 40 at January 31 represent over- or underapplied factory overhead?​Round the factory overhead rate to the nearest cent.

Custom-made goods would be accounted for using a process costing system.