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Exam 20: Process Cost Systems

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Question 61

Multiple Choice

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The portion of whole units that were completed with respect to either materials or conversion costs within a given accounting period is the definition of

A) units started and completed
B) equivalent units
C) conversion costs
D) ending work in process

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

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Question 62

Multiple Choice

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Lean manufacturing is a business philosophy that focuses on reducing time and cost and eliminating poor quality. This is accomplished in manufacturing and nonmanufacturing processes by

A) moving a product from process to process as each function is completed
B) combining processing functions into work centers and cross-training workers to perform more than one function
C) having production supervisors attempt to enter enough materials into manufacturing to keep all manufacturing departments operating
D) having workers typically perform one function on a continuous basis

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

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Question 63

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Which of the following businesses would normally use job order costing systems, and which would normally use process costing systems?​Tax consultantPaint manufacturerNail manufacturerVideographerLotions and cosmetics manufacturerWeb design

In the manufacture of 8,000 units of a product, direct materials cost incurred was $154,600, direct labor cost incurred was $84,000, and applied factory overhead was $45,500. What is the total conversion cost?

If a company uses average costing instead of FIFO, it will still get the same unit costs.

Use this information about the Assembly Department to answer the questions that follow. ? The debits to Work in Process-Assembly Department for April, together with data concerning production, are as follows: ? All direct materials are placed in process at the beginning of the process, and the average cost method is used to cost inventories. ? -The number of equivalent units of production for the period for conversion if the average cost method is used to cost inventories was

Equivalent units should be computed separately for direct materials and conversion costs.

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 18,000 units completed during the period?

The Bottling Department of Mountain Springs Water Company had 5,000 liters in beginning work in process inventory (20% complete). During the period, 58,000 liters were completed. The ending work in process inventory was 3,000 liters (90% complete). What are the equivalent units for conversion costs under the FIFO method?

Process cost systems use job order cost cards to accumulate cost data.

In applying the first-in, first-out method of costing inventories, if 8,000 units that are 30% completed are in process on June 1, 28,000 units are completed during June, and 4,000 units are 75% completed on June 30, the number of equivalent units of production for June is 33,400.

The cost of production report reports the cost of the goods sold.

Discuss how equivalent units are computed under the average cost method.

Use this information about the Assembly Department to answer the questions that follow. ? The debits to Work in Process-Assembly Department for April, together with data concerning production, are as follows: ? All direct materials are placed in process at the beginning of the process, and the average cost method is used to cost inventories. ? -The conversion cost per equivalent unit (rounded to the nearest cent) for April is

The cost per equivalent unit of direct materials and conversion in the Bottling Department of Mountain Springs Water Company is $0.45 and $0.12, respectively. The equivalent units to be assigned costs are as follows:​ The beginning work in process inventory had a cost of $2,200. Determine the cost of completed and transferred out production and the ending work in process inventory.

Use this information about Penny, Inc. to answer the questions that follow. ​ Penny, Inc. employs a process costing system. Direct materials are added at the beginning of the process. Here is information about the July activities: ​ ​ ​ -Using the FIFO method, the cost per equivalent unit for materials used during July was

If a company uses a process costing system to account for the costs in its five production departments, how many work in process accounts will it use?

Lean manufacturing attempts to significantly reduce

The cost of production report summarizes (1) the units for which the department is accountable and the units to be assigned costs and (2) the costs charged to the department and the allocation of those costs.

The three categories of manufacturing costs comprising the total cost of work in process are direct labor, direct materials, and