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Exam 3: Process Costing and Analysis

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Question 1

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Following is a partial process cost summary for Mitchell Manufacturing's Canning Department. If the units completed were transferred to the Labeling Department, what is the appropriate journal entry to transfer the direct materials?

A) Work in Process-Labeling $135,500; Work in Process-Canning $135,500.
B) Work in Process-Labeling $176,500; Work in Process-Canning $176,500.
C) Finished Goods-Labeling $135,500; Finished Goods-Canning $135,500.
D) Work in Process-Labeling $176,500; Finished Goods-Canning $176,500.
E) Finished Goods $136,000; Work in Process $136,000.

F) D) and E)
G) A) and E)

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Question 2

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Conversion cost per equivalent unit is the combined costs of direct labor and factory overhead.

A) True
B) False

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Question 3

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In a process costing system, factory labor costs incurred in a reporting period are presented on the income statement as Factory Labor Expense.

In some circumstances, a process costing system can classify wages paid to maintenance workers as direct labor costs instead of factory overhead.

In a process costing system, when manufacturing overhead costs are applied to the cost of production, they are debited to:

Equivalent units of production refer to the number of units that could have been started and completed given the costs incurred during the period.

A key idea in process costing that refers to the number of units that could have been started and completed given the costs incurred during the period is known as:

A process cost summary shows the cost of a particular job manufactured in the reporting period.

The following refers to units processed by a breakfast cereal maker in August. Compute the total equivalent units of production with respect to conversion for August using the weighted-average inventory method.

Process operations, also called process manufacturing or process production, is the ________ production of similar products in a ________ flow of sequential steps.

Metaline Corp. uses the weighted average method for inventory costs and had the following information available for the year. Calculate the equivalent units of production for the year:

A company's January 1 Work in Process inventory contained 30,000 units that were 25% complete with respect to direct labor. The beginning inventory was completed this year and another 120,000 units were started. Of those started, 80,000 were finished and the remaining 40,000 were 30% complete. Calculate the equivalent units of production for the year using the FIFO method.

Dazzle, Inc. produces beads for jewelry making use. The following information summarizes production operations for June. The journal entry to record June production activities for goods transferred from production to finished goods is:

Job order costing and process costing are two major costing systems used in manufacturing. Briefly contrast the characteristics of these two systems.

At the beginning of the month, the Forming Department of Martin Manufacturing had 10,000 units in inventory, 30% complete as to materials, and 10% complete as to conversion. During the month the department started 60,000 units and transferred 62,000 units to the next manufacturing department. At the end of the month, the department had 8,000 units in inventory, 80% complete as to materials and 60% complete as to conversion. If Martin Manufacturing uses the FIFO method of process costing, compute the equivalent units for materials and conversion respectively for the Forming Department.

Following is a partial process cost summary for Mitchell Manufacturing's Canning Department. The total conversion costs transferred out of the Canning Department equals:

Refer to the following information about the Finishing Department in the Davidson Factory for the month of June. Davidson Factory uses the weighted-average method of inventory costing. Beginning Work in Process inventory: Physical units 5,000 units % complete for materials 70% % complete for labor and overhead 25% Materials cost from May $7,350 Labor and overhead cost from May $3,125 Product started and completed: Physical units 40,000 units Ending Work in Process inventory: Physical units 4,000 units % complete for materials 40% % complete for labor and overhead 10% Manufacturing costs for June: Materials $96,975 Labor and overhead………………………………………… $79,470 Compute the total cost of all units that were completed and transferred to finished goods during June. Compute the total cost of the ending Work in Process inventory.

Refer to the following information about the Finishing Department in the Davidson Factory for the month of June. Davidson Factory uses the FIFO method of inventory costing. Beginning Work in Process inventory: Physical units 5,000 units % complete for materials 70% % complete for labor and overhead 25% Materials cost from May $7,350 Labor and overhead cost from May $3,125 Product started and completed: Physical units 40,000 units Ending Work in Process inventory: Physical units 4,000 units % complete for materials 40% % complete for labor and overhead 10% Manufacturing costs for June: Materials $96,975 Labor and overhead $79,470 Compute the total cost of all units that were completed and transferred to finished goods during June. Compute the total cost of the ending Work in Process inventory.

Describe the flow of overhead costs in a process costing system, including accounts used.

Process costing is applied to operations with repetitive production and customized products.