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Exam 3: Process Costing

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Question 21

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Which one of the following is a costing system commonly used by companies that produce a large number of homogeneous units in a continuous production process?

A) Unit costing system
B) Job-order system
C) Incremental analysis cost system
D) Process costing system

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Question 22

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Which one of the following components of Work in Process is always 100% complete at the beginning of the processing in a department?

A) Direct labor
B) Manufacturing overhead
C) Transferred-in costs
D) Direct material

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Question 23

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In order to calculate the cost per equivalent unit, one must know the number of equivalent units in beginning inventory, ending inventory, units completed during the period, along with the total product costs incurred during the period.

If beginning inventory consisted of 400 units, ending inventory was 600 units, and 7,700 units were started during the period, the number of units completed during the period was 8,700.

Pilot Protectors manufactures pocket knives in three processes and uses process costing. All materials are added at the start of the Forming Department process. The following information is available for March production for the Forming Department: $\begin{array}{lr}\text { Beginning Work in Process ( } 20 \% \text { complete) } & 2,000 \\\text { Plus: Units started } & 34,000 \\\text { Units to account for } & 36,000 \\\text { Less: Ending Work in Process (70\% complete) } & 4,000 \\\text { Units completed } & 32,000\end{array}$ The following costs are available for March: $\begin{array}{lrrr}&\text { Material } & \text { Conversion Cost }& \text { Total Cost }\\\hline\text { Beginning Work in Process } & \$ 11,800 & \$ 22,500 & \$ 34,300 \\\text { Current cost } & 65,600 & 64,500 & 130,100 \\\hline \text { Total cost } & \$ 77,400&\$87,000&\$164,400\end{array}$ What is the cost per equivalent unit for materials?

The cost of the items completed and transferred out of a department is the total cost per equivalent unit times the number of units completed.

Process costing systems are commonly used by companies that produce homogeneous items using a continuous production process.

In the calculation of the cost per equivalent unit, the denominator

Wall Creations uses process costing. On June 1, its Soldering Department had 580 units in process. The department transferred 6,500 units to the next department during June and there were 670 units in process on June 30. How many units were received and started by the Soldering Department during June?

The Mixing Department is the first processing department in Sweet N' Plenty. The beginning Work in Process inventory had a value of $17,700 for conversion costs and additional conversion costs of $214,000 were incurred by the department during the month. There were 2,000 units in ending Work in Process inventory that were 10% complete and 66,000 units were transferred out of the department during the month. The company uses process costing. What is the cost per equivalent unit for conversion costs?

If beginning Work in Process inventory in the Assembly Department consists of 2,200 units, ending inventory is 1,400 units, and 17,000 units were started during the period, how many units were completed and transferred out of the Assembly Department?

During 2014, Cost Savers Production used a predetermined overhead rate of $1.50 per machine hour in the Cutting Department. Actual overhead for the year was $65,000. If 1,700 machine hours were used during the year, what is the correct journal entry to record the application of overhead? $\begin{array}{ll}A.&\text {Manufacturing Overhead\_Cutting Dept. }&2,550\\&\text {Work in Frocess-Cutting Dept. }&&2,550\\B.&\text {Work in Frocess-Cutting Dept. }&2,550\\&\text { Manufacturing Overhead}&&2,550\\C.&\text {Cutting Dept. Expenses }&2,550\\&\text {Manufacturing Overhead-Cutting Dept. }&&2,550\\D.&\text { Finished Goods}&2,550\\&\text {Work in Frocess-Cutting Dept. }&&2,550\\\end{array}$

The denominator in the formula for determining the cost per equivalent unit is determined by adding the number of units completed to the equivalent units in the ending Work in Process inventory.

Mash Company uses process costing. During March, its Varnishing Department incurred costs of $63,250 for conversion. The beginning inventory was 1,500 units and 9,700 units were transferred to the Varnishing Department from the Sanding Department during March. The Varnishing Department's conversion costs in beginning inventory totaled $5,554. The ending inventory consisted of 1,200 units that were 25% complete with respect to conversion costs. Materials are added at the beginning of the process. What is the cost per equivalent unit for conversion costs?

Hanover Glassware produces crystal serve ware and uses process costing. At the start of May, 2,300 units were in process. During May, 11,000 units were completed and 2,000 units were in process at the end of May. These units in process were 80% complete with respect to material and 30% complete with respect to conversion costs. Other information is as follows: $\begin{array}{l}\text { Work in process, May } 1 \text { : }\\\text { Direct material } & \$ 28,800 \\\text { Conversion costs } & 48,000\\\text { Costs incurred during May: }\\\text { Direct materi al } & \$ 198,000 \\\text { Conversion costs } & 242,000\end{array}$ Calculate the cost per equivalent unit for conversion costs.

Department Alpha had no beginning inventory. The department added direct materials costing $55,040 and conversion costs of $88,660 during the month of July. Materials are added at the beginning of the process and conversion costs are added evenly throughout the process in this department. During the month, 40,000 units were completed. At the end of July, 3,000 units remained which were 10% complete with respect to conversion costs. Which one of the following is a correct cost per equivalent unit for materials?

Cost per equivalent unit amounts are usually calculated for

In a process costing system, costs are transferred from the Work in Process inventory account directly to the Cost of Goods Sold account.

Heinz Bottling Company produces various glass and plastic containers and uses a process costing system. The following information relates to production in the Formulating Department during January for the company's 2-quart size glass jars: .Beginning Work in Process inventory: 4,500 units, 85% complete as to conversion costs .Beginning Work in Process inventory-cost of direct materials, $18,000 .Beginning Work in Process inventory-costs of conversion, $14,000 .Number of jars started in January: 270,000 units .Ending Work in Process inventory: 2,000 units, 35% complete as to conversion .Direct materials added during January: $78,075 .Conversion costs incurred during January: $40,700 Direct materials are added at the beginning of the Formulating process, and conversion costs are incurred uniformly throughout production. How much is the total cost to account for during January?

ColorWorks' Painting Department uses a process costing system. It had a beginning Work in Process Inventory of 160 units, which had direct material costs of $17,215. During June, 8,600 units were started and costs of $213,600 were incurred for direct materials. Ending inventory consists of 250 units, which are 80% complete with respect to direct materials. What is the cost per equivalent unit for direct materials?