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Exam 18: Process Costing

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Question 31

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Jiffy Company has 3,000 units that are 70% complete.Jiffy's "equivalent units" are 3,000 completed units.

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Question 32

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The cost transferred to Cost of Goods Sold is equal to the total manufacturing costs incurred for the units sold.

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Question 33

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Process costing system-journal entries Joyce Industries uses a process costing system.All of the company's manufacturing activities take place in a single processing department.There was no beginning inventory in May.During the month,$60,000 of materials were added and $40,000 of labor and $75,000 of overhead costs were charged to work in process.The entire work in process inventory of 20,000 units was completed and transferred to finished goods.Of these 20,000 units,15,000 were sold on account at $14 per unit. In the space provided,prepare a general journal entry to summarize each of the following categories of transactions for the month of May (you may omit explanations): (a.)The recording of manufacturing costs applied to production (use a single journal entry). (b.)The transfer of completed units from work in process to the finished goods warehouse. (c.)The sale of 15,000 units manufactured during the month and the related cost of goods sold.

Completing 3,000 units which were each 75% complete at the beginning of the period represents 2,250 equivalent units of work during the current period. If at the beginning of the period 3,000 units were 75% completed,then to complete these units during the current period,the equivalent units = 3,000 × (100% - 75%)= 750 equivalent units.

Process costing system-journal entries Milton Manufacturing uses a process costing system.Products are processed successively by Department X and Department Y and are then transferred to the finished goods warehouse.Shown below is cost information for Department Y during the month of May: The cost of work in process in Department Y at May 31 has been determined to be $113,500. In the space provided,prepare a general journal entry to summarize for the month of May each of the following categories of transactions (you may omit explanations): (a.)The transfer of production from Department X to Department Y. (b.)The recording of manufacturing costs incurred in Department Y during May.(Use a single journal entry.) (c.)The transfer of completed units from Department Y to the finished goods warehouse.

In most process costing systems,per-unit costs are determined by:

To identify the cause of a change in a product total unit cost,management may:

The number of equivalent units of production:

During the month of August,$582,000 of costs were transferred from the Mixing Department to the Baking Department.The journal entry to summarize the transfer of these costs includes:

United Construction Company,which manufactures residential buildings,would most likely use a process costing system.

Equivalent units What is meant by the term equivalent units? How is this concept used in computing average unit costs?

As costs flow from one production department to the next in a process costing system,one Work in Process Inventory account shows all the changes to the units in production.

In a production cost report,the units in beginning Work in Process are always expressed as equivalent units.

In a production cost report,the units transferred out

Debiting Work in Process in Department Two and crediting Work in Process in Department One represents costs transferred from Department Two to Department One.

Equivalent units of production significantly differ from units completed and transferred during the period only when no significant differences exist between beginning and ending work in process.

Process costing would be suitable for:

In either a job order or a process costing system,credits to the Materials Inventory account represent:

Job order and process costing systems There are two distinct types of cost accounting systems: job order costing systems and process costing systems.How does management decide whether to use a job order costing system or a process costing system in any given manufacturing situation? Explain briefly.

A process costing system is suitable for a company with a large volume of standard products produced on a relatively continuous basis,for example,golf balls or petroleum.