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Exam 3: Process Cost Systems

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Question 91

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If 10,000 units that were 40% completed are in process at November 1, 80,000 units were completed during November, and 12,000 were 20% completed at November 30, the number of equivalent units of production for November was 75,600. (Assume no loss of units in production and that inventories are costed by the first-in, first-out method.)

A) True
B) False

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Question 92

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

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Question 93

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Which of the following best describes the effect on direct labor when management adopts a l ean manufacturing environment?

The cost of materials transferred into the Bottling Department of Mountain Springs Water Company is $32,400, with $26,000 from the Purifying Department, plus additional $6,400 from the materials storeroom. The conversion cost for the period in the Bottling Department is $8,750 ($3,750 factory applied and $5,000 direct labor). The total costs transferred to finished goods for the period was $31,980. The Bottling Department had a beginning inventory of $1,860. (a) Journalize the cost of transferred-in materials, conversion costs, and the cost transferred out to finished goods. (b) Determine the balance of Work in Process-Bottling at the end of the period.

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

The Mountain Springs Water Company has two departments, Purifying and Bottling. The Bottling Department had 8,000 liters in beginning work in process inventory (60% complete). During the period 70,000 liters were completed. The ending work in process was 3,000 liters (60% completed). What are the total equivalent units for direct materials under the FIFO method if materials were added at the beginning of the process?

Equivalent units of production are always the same as the total number of physical units finished during the period.

One of the differences in accounting for a process costing system compared to a job order system is that the amounts used to transfer goods from one department to the next comes from the cost of production report instead of job cost cards.

If 10,000 units that were 50% completed are in process at November 1, 90,000 units were completed during November, and 20,000 were 20% completed at 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.)

Department S had 500 units 60% completed in process at the beginning of the period; 9,000 units completed during the period; and 600 units 30% completed at the end of the period. What was the number of equivalent units of production for the period for conversion if the first-in, first-out method is used to cost inventories? Assume the completion percentage applies to both direct materials and conversion cost.

Kamin Company's Mixing Department had a beginning inventory of 4,000 units which had accumulated conversion costs of $55,000.  During the period, the Mixing Department accumulated conversion costs of $92,000 and started 8,000 new units.  Ending inventory was 2,500 units which were 40% complete with respect to conversion costs.  Kamin uses the average cost method to cost inventories. Calculate the cost per equivalent unit for conversion costs in the Mixing Department .

A firm produces its products by a continuous process involving three production departments, 1 through 3. Present entries to record the following selected transactions related to production during August: (a) Materials purchased on account, $120,000 (b) Material requisitioned for use in Department 1, $125,700, of which $124,200 entered directly into the product (c) Labor cost incurred in Department 1, $195,400, of which $174,000 was used directly in the manufacture of the product (d) Factory overhead costs for Department 1 incurred on account, $54,700 (e) Depreciation on machinery in Department 1, $29,200 (f) Expiration of prepaid insurance chargeable to Department 1, $7,000 (g) Factory overhead applied to production in Department 1, $106,300 (h) Output of Department 1 transferred to Department 2, $362,700

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

Mocha Company manufactures a single product by a continuous process, involving three production departments. The records indicate that direct materials, direct labor, and applied factory overhead for Department 1 were $100,000, $125,000, and $150,000, respectively. The records further indicate that direct materials, direct labor, and applied factory overhead for Department 2 were $55,000, $65,000, and $80,000, respectively. In addition, work in process at the beginning of the period for Department 1 totaled $75,000, and work in process at the end of the period totaled $60,000. The journal entry to record the flow of costs into Department 2 for applied overhead is

Mocha Company manufactures a single product by a continuous process, involving three production departments. The records indicate that direct materials, direct labor, and applied factory overhead for Department 1 were $100,000, $125,000, and $150,000, respectively. The records further indicate that direct materials, direct labor, and applied factory overhead for Department 2 were $55,000, $65,000, and $80,000, respectively. In addition, work in process at the beginning of the period for Department 1 totaled $75,000, and work in process at the end of the period totaled $60,000. The journal entry to record the flow of costs from Department 1 into Department 2 is

In a process cost system, product costs are accumulated by processing department rather than by job.

Lean manufacturing  attempts to significantly reduce

Conversion costs are usually incurred evenly throughout a process.

Mocha Company manufactures a single product by a continuous process, involving three production departments. The records indicate that direct materials, direct labor, and applied factory overhead for Department 2 were $100,000, $125,000, and $150,000, respectively. The records further indicate that direct materials, direct labor, and applied factory overhead for Department 3 were $50,000, $60,000, and $70,000, respectively. In addition, work in process at the beginning of the period for Department 3 totaled $75,000, and work in process at the end of the period totaled $60,000. The journal entry to record the flow of costs into Department 3 during the period for direct materials is

Direct materials, direct labor, and factory overhead are assigned to each manufacturing process in a process costing system.