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Exam 20: Process Costing

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Question 41

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Que Corporation uses a process cost accounting system.The company manufactured certain goods at a cost of $800 and sold them on credit to Are Corporation for $1,075.The complete journal entry to be made by Que at the time of this sale is:

A) Debit Accounts Receivable $1,075; credit Sales $1,075; debit Cost of Goods Sold $800; credit Finished Goods Inventory $800.
B) Debit Accounts Receivable $1,075; credit Sales $275; credit Finished Goods Inventory $800.
C) Debit Cost of Goods Sold $1,075; credit Sales $1,075.
D) Debit Finished Goods Inventory $800; debit Sales $1,075; credit Accounts Receivable $1,075; credit Cost of Goods Sold $800.
E) Debit Accounts Receivable $1,075; debit Selling expense $800; credit Sales $1,075; credit Cost of Goods Sold $800.

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Question 42

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The fourth step in accounting for production activity in a period is to prepare a cost reconciliation,which reconciles __________________ with the ___________________.

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Question 43

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Briefly explain the conditions under which job order cost accounting systems and process cost accounting systems are commonly applied.

One section of the process cost summary describes the equivalent units of production for the department during the reporting period and presents the calculations of the costs per equivalent unit.

If the predetermined overhead allocation rate is 350% of direct labor cost and the Painting Department's direct labor cost for the reporting period is $20,000,the following entry would record the allocation of overhead to the products processed in this department: Goods in Process Inventory,Painting Dept………………… 70,000 Factory Overhead.………………………. 70,000

Prepare the required general journal entry to record the following transactions for the Flaherty Company. a.Incurred $95,000 of factory labor cost which is paid in cash. b.Used $78,000 of direct labor in the production department. c.Used $17,000 of indirect labor.

The number of equivalent units of production assigned to ending goods in process inventory should be equal to or less than the number of physical units in ending goods in process inventory.

During March,the production department of a process manufacturing system completed a number of units of a product and transferred them to finished goods.Of the units transferred,25,000 were in process at the beginning of March and 110,000 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 labor cost of $578,900 and its beginning inventory included labor cost of $54,700.Compute the direct labor cost per equivalent unit for the department using the weighted-average method.

A process cost summary is a managerial accounting report that describes:

Match the following terms with the definitions.

The last step in the four-step accounting procedure for process costing is the calculation of equivalent units of production.

Refer to the following information about the Dipping Department of the Indiana Factory for the month of August.Indiana Factory uses the weighted average method of inventory costing. The cost per equivalent unit of materials is $10.00,and the cost per equivalent unit of labor and overhead is $22.00.Compute the cost that should be assigned to the units that were started and completed during August.

To determine unit cost under a process cost accounting system,equivalent units produced must be calculated if the company has goods in process inventories.

If a production department has 100 equivalent units of production with respect to direct materials in a given reporting period,the equivalent units of production with respect to direct labor also must be 100.

Once equivalent units are calculated for materials,this number will also be used for direct labor and factory overhead.

A production department is an organizational unit that has the responsibility for at least partially processing a product.

Refer to the following information about the Painting Department in the Richardson Factory for the month of June.Richardson Factory uses the FIFO method of inventory costing. Beginning goods 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 goods 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 equivalent units for direct materials,direct labor and overhead for June.

Harbor Manufacturing Company uses a process cost accounting system.Materials are added at the beginning of the process.Direct labor and overhead are added evenly throughout the process.The company uses monthly reporting periods for its weighted-average process cost accounting.The following are the operating and cost data information for October. The October 1 beginning Goods in Process Inventory consisted of 20,000 units.The costs for this inventory are $82,500 of direct materials,$24,400 of direct labor,and $48,800 of factory overhead.Factory overhead is applied at 200% of direct labor cost. In addition to the beginning inventory costs,the company issued the following costs into Goods in Process Inventory; direct materials,$240,000; direct labor,$68,000; factory overhead,$136,000. During October,the company completed and transferred 60,000 units of its product to finished goods.At the end of the month,the goods in process inventory consisted of 15,000 units that were 40% complete with respect to direct labor and factory overhead and 100% complete with respect to materials. Prepare the company's process cost summary for October using the weighted average method.

Which of the following is not one of the four steps in accounting for production activity and assigning costs during a period under a process cost system?

Describe the flow of materials in a process cost accounting system,including accounts used.