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Exam 6: Process Costing

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Question 1

True/False

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The weighted average costing method combines beginning inventory costs and work done with current period costs and work to calculate this period's unit cost.

A) True
B) False

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Question 2

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Suppose that finished units are now in the last (final) department. To which account will the cost of the finished units flow from the Work-in-Process Inventory account?

A) Sales
B) Expenses
C) Cost of Goods Sold
D) Finished Goods Inventory

E) All of the above
F) B) and D)

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Question 3

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In process costing, each producing department has its own Work-in-Process Inventory account.

Refer to Red Manufacturing. What would be the equivalent unit conversion cost for October when using the weighted average costing method?

Refer to Door Specialists. How many units were completed in the second department during March?

Match the order of the five steps involved in creating the department production report with the descriptions below. -Computation of unit costs

Transferred-in costs are a type of raw material cost.

Which term refers to the cost of partially completed goods from a prior period?

For which business is process costing is most appropriate?

The following information is provided: Units Work-in-Process Inventory, May 1 (10% complete) 5,000 Started in May 18,000 Work-in-Process Inventory, May 31 (40% complete) 4,000 Materials and conversion are incurred uniformly throughout the process. What would be the equivalent units of production for conversion when using the weighted average costing method?

Select the most appropriate costing system for each of the following industries * Each costing system may be used more than once. -Chocolate bar manufacturer

Refer to M&M Manufacturing Company. How many units were started during the period?

Which of the following reflects the solution for nonuniform manufacturing inputs using process costing?

Which statement best defines the concept of equivalent units of production?

Any product or service that is basically homogeneous and repetitively produced can take advantage of a process costing approach.

The Stewart Company had computed the flow of units for Department 123 for the month of July as follows: Work-in-Process Inventory, July 1: 10,000 Started into production during July 39,000 Units to be accounted for 49,000 $\begin{array}{lrr}&\text { Beginning }&\text { Added during the }\\&\text { Work-in-Process Inventory }&\text { current month }\\\text { Materials } & \$ 20,800 & \$ 97,500 \\\text { Labour } & 5,200 & 34,920 \\\text { Manufacturing overhead } & 4,800 & 32,980\\\text { Total }&\$30,800&\$165,400\end{array}$ Materials are added at the beginning of the process. There were 8,000 units of Work-in-Process Inventory at July 31. The Work-in-Process Inventory at July 1 was 70% complete as to direct labour and manufacturing overhead costs, and the Work-in-Process Inventory at July 31 was 60% complete as to direct labour and manufacturing overhead costs. What was the cost of the goods transferred out and in ending Work-in-Process Inventory using the FIFO costing method?

Cara, Inc. manufactures a product that passes through two processes: mixing and packaging. All manufacturing costs are added uniformly in the mixing department. Information for the mixing department for April follows: Work-in-Process Inventory, April 1 Units (60% complete) 5,000 Direct materials $40,000 Direct labour $50,000 Overhead $ 5,000 During April, 90,000 units were completed and transferred to packaging. The following costs were incurred by the mixing department during April: Direct materials $280,000 Direct labour 190,000 Overhead 75,000 At April 30, 15,000 units that were 20% complete remained in the mixing department. Use the weighted average costing method and round unit costs to two decimal places. Required: A. Determine equivalent units of production for April for the mixing department. B. Determine April's total costs to account for in the mixing department. C. Determine total cost per equivalent unit of production in the mixing department. D. Determine the cost of goods transferred to the packaging department. E. Determine the cost of April's ending Work-in-Process Inventory for the mixing department.

Under the FIFO costing method, for the beginning Work-in-Process Inventory units, the total associated manufacturing costs are the sum of the prior-period costs plus the costs incurred in the current period to finish the units.

What does an accountant need to know to calculate unit cost?

Firms that offer service cannot have Work-in-Process Inventory.