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Exam 3: Process Cost Systems

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Question 61

True/False

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In a just-in-time system, processing functions are combined into work centers, sometimes called departments.

A) True
B) False

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Question 62

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Match the correct term with the statement that describes it.

Premises

Responses

equivalent units

Conversion costs

direct labor and factory overhead

Prime costs

cost of production report

Costs incurred in a previous process that are carried forward as part of the product’s cost when it moves to the next department

transferred-in costs

Costing system used by a company producing computer chips

process costing

Summary of the activity in a processing department for a specific period

direct labor and direct materials

A process costing method that costs each period’s equivalent units of work with that period’s costs per equivalent unit

job costing

Costing system used by a company producing by a company producing custom window treatments

FIFO method

Measure of the work done during a production period, expressed in terms of fully complete units of output

Premises

equivalent units

direct labor and factory overhead

cost of production report

transferred-in costs

process costing

direct labor and direct materials

job costing

FIFO method

Responses

Conversion costs

Prime costs

Costs incurred in a previous process that are carried forward as part of the product’s cost when it moves to the next department

Costing system used by a company producing computer chips

Summary of the activity in a processing department for a specific period

A process costing method that costs each period’s equivalent units of work with that period’s costs per equivalent unit

Costing system used by a company producing by a company producing custom window treatments

Measure of the work done during a production period, expressed in terms of fully complete units of output

Show Answer

Correct Answer

Premises

Responses

equivalent units

direct labor and factory overhead

cost of production report

transferred-in costs

process costing

direct labor and direct materials

job costing

FIFO method

Premises

equivalent units

direct labor and factory overhead

cost of production report

transferred-in costs

process costing

direct labor and direct materials

job costing

FIFO method

Responses

Question 63

Multiple Choice

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Department J had no work in process at the beginning of the period, 18,000 units were completed during the period, 2,000 units were 30% completed at the end of the period, and the following manufacturing costs were debited to the departmental work in process account during the period (Assuming the company uses FIFO and rounds average cost per unit to two decimal places) : Assuming that all direct materials are placed in process at the beginning of production, what is the total cost of the departmental work in process inventory at the end of the period?

The cost of direct materials transferred into the Bottling Department of the Mountain Springs Water Company is $27,225. The conversion cost for the period in the Bottling Department is $7,596. The total equivalent units for direct materials and conversion are 60,500 and 63,300 respectively. Determine the direct materials and conversion cost per equivalent unit.

Which of the following costs incurred by a paper manufacturer would be included in the group of costs referred to as conversion costs?

Carmelita Inc., has the following information available: At the beginning of the period, there were 500 units in process that were 60 percent complete as to conversion costs and 100 percent complete as to direct materials costs. During the period 4,500 units were started and completed. Ending inventory contained 340 units that were 30 percent complete as to conversion costs and 100 percent complete as to materials costs. (Assume that the company uses the FIFO process cost method.) The cost of completing a unit during the current period was

The first step in determining the cost of goods completed and ending inventory valuation using process costing is to calculate equivalent units of production.

Just-in-time operations attempt to significantly reduce

In a process costing system, costs flow into finished goods inventory only from the work in process inventory of the last manufacturing process.

The cost of materials transferred into the Bottling Department of Mountain Springs Water Company is $32,400, with $26,000 from the Purifying Department, plus additional $6,400 from the materials storeroom. The conversion cost for the period in the Bottling Department is $8,750 ($3,750 factory applied and $5,000 direct labor.) The total costs transferred to finished goods for the period was $31,980. The Bottling Department had a beginning inventory of $1,860.

Which of the following entities would probably use a process costing system?

The Bottling Department of Mountain Springs Water Company had 4,000 liters in beginning work in process inventory (40% complete). During the period, 66,000 liters were completed. The ending work in process inventory was 3,000 liters (70% complete). What are the equivalent units for conversion costs, using the FIFO method?

When a firm adopts a just-in-time operating environment,

The cost per equivalent units of direct materials and conversion in the Bottling Department of Mountain Springs Water Company is $.45 and $.12, respectively. The equivalent units to be assigned costs are as follows.

Describe the flow of materials in a process cost accounting system.

If a company uses a process costing system to account for the costs in its four production departments, how many Work-in-Process will it use?

The debits to Work in Process--Assembly Department for April, together with data concerning production, are as follows: All direct materials are placed in process at the beginning of the process and the first-in, first-out method is used to cost inventories. The conversion cost per equivalent unit for April is:

Using the FIFO method, the cost of goods completed and transferred out during July was (use average cost per unit rounded to four decimal places in computations)

Which of the following is not a characteristic of a process cost system?

Department E had 4,000 units in Work in Process that were 40% completed at the beginning of the period at a cost of $12,500. 14,000 units of direct materials were added during the period at a cost of $28,700. 15,000 units were completed during the period, and 3,000 units were 75% completed at the end of the period. All materials are added at the beginning of the process. Direct labor was $32,450 and factory overhead was $18,710. The number of equivalent units of production for the period for materials if the average cost method is used to cost inventories was: