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Exam 20: Process Costing

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Question 121

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Process and job order manufacturing operations both combine materials, labor, and overhead items in the process of producing products.

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Question 122

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A company uses the weighted average method for inventory costing. At the beginning of a period the production department had 20,000 units in beginning Work in Process inventory which were 40% complete; the department completed and transferred 165,000 units. At the end of the period, 22,000 units were in the ending Work in Process inventory and are 75% complete. Compute the number of equivalent units produced by the department.

A) 165,000.
B) 181,500.
C) 187,000.
D) 145,000.
E) 173,500.

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Question 123

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The following is an account for a production department, showing its costs for one month: Assume that materials are added at the beginning of the production process and that direct labor and overhead are applied uniformly. If the started and completed units cost $41,850, what was the cost of completing the units in the beginning Work in Process inventory?

Pitt Enterprises manufactures jeans. All materials are introduced at the beginning of the manufacturing process in the Cutting Department. Conversion costs are incurred uniformly throughout the manufacturing process. As the cutting of material is completed, the pieces are immediately transferred to the Sewing Department. Information for the Cutting Department for the month of May follows. Work in Process, May 1 (50,000 units, 100% complete for direct materials, 40% complete with respect to conversion costs; includes $70,500 of direct material cost; $34,050 of conversion costs) . $\begin{array}{llr} \text { Units started in May} &225,000\\ \text { Units completed in May } &200,000\\\end{array}$ Work in Process, May 31 (75,000 units, 100% complete for direct materials; 20% complete for conversion costs) . Costs incurred in May Direct materials $ 342,000 Conversion costs $ 352,950 - If Pitt Enterprises uses the weighted average method of process costing, compute the equivalent units for direct materials and conversion respectively for May.

In process costing, direct labor includes only the labor that is applied directly to individual units of product.

During March, the production department of a process operations system completed and transferred to finished goods 25,000 units that were in process at the beginning of March and 110,000 units that were started and completed in March. March's beginning inventory units were 100% complete with respect to materials and 55% complete with respect to labor. At the end of March, 30,000 additional units were in process in the production department and were 100% complete with respect to materials and 30% complete with respect to labor. The production department incurred direct materials cost of $253,000 and its beginning inventory included materials cost of $93,500. Compute the direct materials cost per equivalent unit for the department using the weighted-average method.

Andrews Corporation uses the weighted-average method of process costing. The following information is available for February in its Polishing Department: $\begin{array}{lr}\text { Equivalent units of production-direct materials } & 110,000 \mathrm{EUP} \\\text { Equivalent units of production conversion } & 95,000 \mathrm{EUP}\\\text { Costs in beginning Work in Process-direct materials } & \$ 49,000 \\\text { Costs in beginning Work in Process conversion } & \$ 36,000 \\\text { Costs incurred in February-direct materials } & \$ 414,000 \\\text { Costs incurred in Febuary-conversion } & 520.000\end{array}$ - The cost per equivalent unit of production for conversion is:

In a process costing system, the entry to record cost of materials assigned to a production department requires a debit to the Work in Process Inventory account for that department and a credit to the Raw Materials Inventory account.

Sutton Company uses a process costing system. In May, 80,000 units were finished and transferred to finished goods. Ending Work in Process included 20,000 unfinished units 30% complete. Calculate the equivalent units of production for the year using the weighted average method.

Which of the following statements is most accurate?