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Exam 3: Process Cost Systems

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Question 1

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If the products of a manufacturing process are produced to customer specifications, a process cost system is more appropriate than a job order cost system.

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Question 2

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When a process cost accounting system records the purchase of materials, the Materials account is credited.

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Question 3

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Match each phrase that follows with the term a-e it describes. -focuses on reducing time, cost, and poor quality within the process

A process cost accounting system records all actual factory overhead costs directly in the Work in Process account.

Fast­Flow Paints produces mixer base paint through a two-stage process, Mixing and Packaging.The following events depict the movement of value into and out of production.Journalize each event if appropriate; if not, provide a short narrative reason as to why you choose not to journalize the action.Nelson, the production manager, accepts an order to continue processing the current run of mixer base paint. a Materials worth $27,000.00 are withdrawn from raw materials inventory.Of this amount, $25,500.00 will be issued to the Mixing Department and the balance will be issued to the Maintenance Department to be used on production line machines. b Nelson calculates that labor for the period is $12,500.00.Of this amount, $1,750.00 is for maintenance and indirect labor.The remainder is directly associated with mixing. c Nelson, who is paid a salary but earns about $35.00/hour, spends 1 hour inspecting the production line. d The manufacturing overhead drivers for mixing are hours of mixer time at $575.00 per hour, and material movements from materials at $125.00 per movement.An inspection of the machine timers reveals that a total of 8 hours has been consumed in making this product.An inspection of "stocking orders" indicates that only one material movement was utilized to load the raw materials.Note: All values have been journalized to Factory Overhead, you need only apply them to the production run. e Within Fast-Flow, items are transferred between departments at a standard cost.This production run has created 4,015 gallons of mixer base paint.This paint is transferred to Packaging at a standard cost of $10.05 per gallon.Round calculation to nearest whole dollar. f Packaging draws $755.00 of materials for packaging of this production run. g Packaging documents that 12 hours of direct labor at $10.25 per hour were consumed in the packaging of this production run. h Packaging uses a cost driver of direct labor hours to allocate manufacturing overhead at the rate of $25.00 per hour. i Packaging transfers 4,015 gallons of packaged goods to Finished Goods Inventory at a standard cost of $10.34 per gallon.Round calculation to nearest whole dollar.

All of the following are characteristics of a process cost system except

In a process costing system, a separate work in process inventory account is maintained for each customer's job.

Department K had 3,000 units 45% completed in process at the beginning of the period; 17,000 units completed during the period; and 1,200 units 40% 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.

All direct materials are placed in process at the beginning of production and the first-in, first-out method of inventory costing is used.What is the total cost of the units started and completed during the period round unit cost calculations to four decimal places?

Department M had 600 units 60% completed in process at the beginning of June, 6,000 units completed during June, and 700 units 30% completed at the end of June.Using the first-in, first-out method of inventory costing, what was the number of equivalent units of production for conversion costs for the period?

The amount journalized showing the cost added to finished goods is taken from the cost of production report.

Match each phrase that follows with the term a-h it describes. -a process costing method that costs each period's equivalent units of work with that period's costs per equivalent unit

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.

If a company uses average costing instead of FIFO, it will still get the same unit costs.

Gilbert Corporation had 25,000 finished units and 8,000 units 35% complete.The equivalent units totaled 30,200.

Alexandra Company's Molding Department opened on July 1.During July, 70.000 units were completed and transferred out to the next department.On July 31, the 10,000 units which remained in inventory were 40% complete with respect to conversion costs and 100% complete with respect to materials. How many equivalent units of work did the Molding Department complete during July for materials and conversion costs?

Match each phrase that follows with the term a-e it describes. -the portion of whole units that are complete with respect to materials or conversion costs

Which of the following measures would not help managers to control and improve operations?

The materials cost per equivalent unit to the nearest cent for April is

Which of the following best describes the effect on direct labor when management adopts a just-in-time environment?