Q&A Hero

Q: If the factory labor cost for a month was $123,000 (paid in cash), the following journal entry would be recorded by the process cost accounting system: Factory Payroll...................... 123,000 Cash.. 123,000

Q: After all process cost accounting journal entries are recorded and posted for a reporting period, the Factory Payroll account should have a zero balance.

Q: If Department Q uses $60,000 of direct materials and Department T uses $15,000 of direct materials, the following journal entry would be recorded by the process cost accounting system: Goods in Process Inventory, Department Q.......................... 60,000 Goods in Process Inventory, Department T.......................... 15,000 Raw Materials Inventory....................................................... .......................................... 75,000

Q: A unique feature of process costing systems is the use of a single Goods in Process Inventory control account when more than one production department exists.

Q: If Department A uses $10,000 of direct materials and Department B uses $15,000 of direct materials, the following journal entry would be recorded by the process cost accounting system: Goods in Process Inventory, Department A.......................... 10,000 Goods in Process Inventory, Department B.......................... 15,000 Raw Materials Inventory. 25,000

Q: A materials consumption report is a source document that summarizes the materials used during a reporting period.

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

Q: In a process cost accounting system, the purchase of raw materials is debited to the Raw Materials Inventory.

Q: In a process cost accounting system, the purchase of raw materials is credited to the Raw Materials Inventory.

Q: In process cost accounting, materials are always classified as indirect if they are not physically incorporated into the final product.

Q: Process cost accounting systems consider direct costs to include those costs that can be readily identified with a particular process.

Q: Direct costs in process cost accounting include only those costs that can be readily identified with individual product units.

Q: In process cost accounting, the classification of materials as direct or indirect depends on whether they are clearly linked with a specific process.

Q: The use of process costing is of little benefit to a service type of operation.

Q: Process cost accounting systems are commonly used by companies that manufacture standardized products by passing them through a series of manufacturing steps.

Q: Process cost accounting systems are used only by companies that manufacture physical products; meaning that companies and other organizations that provide services to their customers do not use process cost accounting.

Q: Companies that use a series of repetitive manufacturing processes to produce standardized products should use a process cost accounting system.

Q: In process cost accounting, all labor that is applied exclusively in a single production department is considered to be direct labor.

Q: Process costing is applied to operations with repetitive production and heterogeneous products.

Q: When defining direct costs and indirect costs in process costing, it is the process that is the cost object.

Q: In a process cost accounting system, with the exception of the first department, each department receives output from the prior department as a partially processed product.

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

Q: Accountants use the term process cost accounting system because this system uses a number of trained individuals and computers to process the collected cost information.

Q: Process cost accounting systems are commonly used by companies that produce a large volume of standardized units on a continuous basis.

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

Q: The FIFO method does not use the beginning inventory costs in computing the cost per equivalent unit for the current period.

Q: If a department that uses process costing starts the reporting period with 100,000 physical units that were 20% complete with respect to direct labor, it must add 80% direct labor in the current period to complete the units.

Q: The FIFO method separates prior period costs from costs incurred during the current period.

Q: A process cost summary shows the cost of a particular job manufactured in the reporting period.

Q: A process cost summary includes the amounts of equivalent units of production for the period.

Q: A process cost summary is an accounting report that describes the costs charged to a department, the equivalent units of production by the department, and how the costs were assigned to the output.

Q: The process cost summary is an important managerial accounting report produced by a process cost accounting system.

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

Q: Equivalent units of production is an engineering term used to describe the process by which one company attempts to manufacture units of a product that are equivalent to the product manufactured by a competitor.

Q: Equivalent units of production need to be determined only if a processing department adds materials and labor to its products at different rates.

Q: Equivalent units of production are always the same as the total number of physical units finished during the period.

Q: In a process cost accounting system, a department's production should be measured in terms of equivalent units when its beginning or ending inventory includes goods in process.

Q: Equivalent units of production refer to the number of units that would be completed if all effort during a period had been applied only to those units that were started and completed in a period.

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

Q: Process manufacturing usually reflects a manufacturer that produces large quantities of identical products.

Q: The managers of process manufacturing systems focus on the series of processes needed to complete the production of products.

Q: When the completed goods are sold, the cost of the completed goods are transferred to ____________________ .

Q: When the final production department completes goods, the cost of the completed goods are transferred to ____________________ .

Q: On a process cost summary, the total costs to account for (the processing costs for the period plus the goods in process at the end of the period) should equal ___________________ (____________________ plus _____________________).

Q: A process cost summary involves computations and analysis at four sequential steps. These are (1) _________ (2) _____________, (3) _______________, and (4) ______________.

Q: In process costing, factory overhead incurred does not usually equal that applied, which yields either ____________________ or ___________________ overhead.

Q: In a manufacturing operation with two process departments (1 and 2), the flow of costs would proceed from Goods in Process, Department #1 to ________________.

Q: In a process costing accounting system, direct materials used are debited to the __________ account, and indirect materials used are debited to the ____________ account.

Q: Materials and labor costs that are clearly associated with a specific process are known as ___________________. Those costs that are not clearly associated with a specific process are called ________________.

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

Q: The third step in accounting for production activity in a period is to compute the ______________________.

Q: The second step in accounting for production activity in a period is to compute ______________________.

Q: If a process has _______________ or _______________ inventory of partially completed production, equivalent units must be calculated so that total costs incurred during the period are assigned to all units worked on.

Q: An equivalent unit of production is an estimate of efforts that is used to calculate the ______________ of each production component.

Q: 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 companys process cost summary for October using the weighted average method.

Q: Prepare journal entries to record the following production activities for Sherman Manufacturing. a. Incurred overhead costs of $79,000 (paid in cash). b. Applied overhead at 110% of direct labor costs which are $93,900. c. Transferred completed products with a cost of $258,200 to finished goods inventory. d. Sold $602,000 of product on credit. Cost is $271,000.

Q: Prepare journal entries to record the following production activities for Sherman Manufacturing. a. Incurred $105,100 of factory labor cost which is paid in cash. b. Used $93,900 of direct labor in the production department. c. Used $11,200 of indirect labor.

Q: Prepare general journal entries to record the following production activities for Sherman Manufacturing. a. Purchased $82,000 of raw materials on credit. b. Used $63,500 of direct materials in production. c. Used $12,800 of indirect materials.

Q: The following table of cost information is available for the Messier Company for the month of November: Goods in Process Inventory Mixing Goods in Process Inventory Molding Finished Goods Inventory Beginning Inventory...................................... $12,000 $15,000 $24,000 Costs incurred: Direct materials................................. 22,000 14,000 Direct labor................................. 32,000 17,000 Overhead applied................................. 47,000 24,500 Costs transferred out................................. (100,000) (152,000) Costs transferred in................................. 100,000 152,000 Cost of goods sold (149,000) Ending inventory...................................... 13,000 18,500 27,000 Based on the table of cost information above, prepare the general journal entry required to record the: a. Transfer of goods from the molding department to the finished goods inventory. b. Cost of goods sold for November.

Q: Browning Company had 8,700 units in beginning inventory with accumulated costs for direct materials of $17,900, $16,500 direct labor, and $13,200 of overhead. During July, the company completed and transferred 50,000 units to finished goods. Costs incurred in the current period included $45,000 of direct materials, $58,500 of direct labor, and $46,800 of factory overhead. Ending inventory consisted of 12,000 units which were 80% complete with respect to materials and 50% complete with respect to labor and overhead. Compute the value assigned to ending inventory based on the weighted average method of inventory costing.

Q: Lipinski Company completed and transferred 90,000 units during the current period. Based on the following information, determine the cost of the goods completed during the current reporting period and journalize the transfer. Direct Materials Direct Labor/OH Costs of Beginning goods in process: $576,000 $400,000 Costs incurred this period 2,400,000 5,120,000 Equivalent units of production 96,000 92,000

Q: Heesacker, Inc. uses a process cost accounting system. The following operating and cost data occurred during October: October 1, Inventory: 30,000 units 100% complete for materials ($60,000) and 50% complete for direct labor ($7,500) and overhead ($15,000) October 31, Inventory: 20,000 units 100% complete for materials and 30% complete for direct labor and overhead Units started during Oct.: 40,000 units October production costs: Direct materials............................ $110,100 Direct labor............................ 28,900 Overhead............................ 57,800 Materials are added at the beginning of the process. Direct labor and overhead are incurred evenly throughout the process. Prepare the October process cost summary assuming the weighted average method of inventory costing.

Q: Nano Company uses a weighted average process cost system. The department started and finished 149,000 units during the current period. The ending inventory consists of 60,000 units that are 75% complete with respect to direct labor and overhead. All direct materials are added at the beginning of the process. The department incurred direct labor costs of $262,500 and overhead costs of $126,000. (a) Compute the equivalent cost per unit for direct labor. (b) Compute the equivalent cost per unit for overhead.

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Q: Refer to the following information about the Dipping Department of the Indiana Factory for the month of August. Indiana Factory uses the FIFO method of inventory costing. Equivalent Units Total Cost Beginning goods in process: Costs from prior month......................................... $ 7,000 Materials added......................................... 300 Labor and overhead added......................................... 375 Started and completed goods: Materials added......................................... 2,000 Labor and overhead added......................................... 2,000 Ending goods in process: Materials added......................................... 320 Labor and overhead added......................................... 360 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 ending goods in process inventory for August.

Q: Refer to the following information about the Dipping Department of the Indiana Factory for the month of August. Indiana Factory uses the FIFO method of inventory costing. Equivalent Units Total Cost Beginning goods in process: Costs from prior month......................................... $ 7,000 Materials added......................................... 300 Labor and overhead added......................................... 375 Started and completed goods: Materials added......................................... 2,000 Labor and overhead added......................................... 2,000 Ending goods in process: Materials added......................................... 320 Labor and overhead added......................................... 360 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 all units that were completed and transferred during August.

Q: 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. Equivalent Units Total Cost Beginning goods in process: Costs from prior month......................................... $ 7,000 Materials added......................................... 300 Labor and overhead added......................................... 375 Started and completed goods: Materials added......................................... 2,000 Labor and overhead added......................................... 2,000 Ending goods in process: Materials added......................................... 320 Labor and overhead added......................................... 360 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.

Q: Refer to the following information about the Dipping Department of the Indiana Factory for the month of August. Indiana Factory uses the FIFO method of inventory costing. Equivalent Units Total Cost Beginning goods in process: Costs from prior month......................................... $ 7,000 Materials added......................................... 300 Labor and overhead added......................................... 375 Started and completed goods: Materials added......................................... 2,000 Labor and overhead added......................................... 2,000 Ending goods in process: Materials added......................................... 320 Labor and overhead added......................................... 360 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 beginning units that were completed and transferred during August.

Q: Iolaus Company provides the following data for the current year: Estimated Factory Overhead 7,800 Factory Overhead Incurred $11,400 Factory Overhead Applied ? Estimated Direct Labor Cost 12,000 Direct Labor Cost Incurred 11,800 Required: a. Calculate the predetermined overhead allocation rate based on direct labor. b. Determine the amount of overhead applied to production. c. Prepare the journal entry to apply factory overhead to goods in process.

Q: 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.

Q: Prepare the required general journal entries to record the following transactions for the Bell Company. a. Purchased $40,000 of raw materials on account. b. Used $12,000 of direct materials in the production department. c. Used $5,000 of indirect materials.

Q: A company's January 1 goods in process inventory contained 30,000 units that were 25% complete with respect to direct labor. The beginning inventory was completed this year and another 120,000 units were started. Of those started, 80,000 were finished and the remaining 40,000 were 20% complete. Calculate the equivalent units of production for the year using the FIFO method.

Q: Refer to the following information about the Painting Department in the Richardson Factory for the month of June. Richardson Factory uses the weighted-average 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 the total cost of all units that were completed and transferred to finished goods during June. Compute the total cost of the ending goods in process inventory.

Q: 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 the total cost of all units that were completed and transferred to finished goods during June. Compute the total cost of the ending goods in process inventory.

Q: 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 the equivalent cost per unit for direct materials, direct labor and overhead for June.

Q: 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.

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Q: A company's January 1 goods in process inventory contained 30,000 units that were 25% complete with respect to direct labor. The beginning inventory was completed this year and another 120,000 units were started. Of those started, 80,000 were finished and the remaining 40,000 were left 20% complete. Calculate the equivalent units of production for the year using the weighted average method.

Q: Describe the flow of overhead costs in a process cost accounting system, including accounts used.

Q: Describe the flow of labor in a process cost accounting system, including accounts used.