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Exam 8: Process Costing

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Question 81

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Operations costing systems are used when the products have:

A) used a standardized method that is repeatedly performed.
B) common characteristics and no individual characteristics.
C) individual characteristics and no common characteristics.
D) some common characteristics and some individual characteristics.

E) A) and B)
F) A) and D)

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Question 82

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Hsu Corporation uses the FIFO method in its process costing system.The following data concern the company's Grinding Department for the month of August. $\begin{array} { | l | r | } \hline \text { Cost in beginning work-in-process inventory } & \$ 1,090 \\\hline \text { Units started and completed this month } & 2,670 \\\hline\end{array}$ Required: Determine the cost of ending work-in-process inventory and the cost of units transferred out of the department during August using the FIFO method.

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Question 83

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If materials are only added at the beginning of the production process,then the degree of completion for materials in the ending Work-in-Process Inventory will be the same as the degree of completion for the conversion costs.

Which of the following statements is(are) true regarding product costing? (A) Twenty cans of paint that are 25% full are equivalent to four cans of paint that are completely full.(B) The equivalent unit concept refers to the actual amount of work during the period stated in terms of whole units.

Emerson,Inc.uses the FIFO method in its process costing system.The following data concern the operations of the company's first processing department - Mixing - for a recent month. Required: $\begin{array}{l}\begin{array}{|l|r|}\hline \text { Work-in-process, beginning: }\\\hline \text { Units in process } & 500 \\\hline \text { Percent complete with respect to materials } & 70 \% \\\hline \text { Percent complete with respect to comversion } & 30 \% \\\hline \text { Costs in the beginning imventory: } & \\\hline \text { Materials cost } & \$ 2,240 \\\hline \text { Conversion cost } & \$ 4,365 \\\hline \text { Units started into production during the month } & 16,000 \\\hline \text { Units completed and transterred out } & 16,000 \\\hline \text { Costs added to production during the month: } & \\\hline \text { Materials cost } & \$ 98,580 \\\hline \text { Comversion cost } & \$ 468,930 \\\hline \text { Work-ir-process, ending: } & \\\hline \text { Units in process } & 500 \\\hline \text { Percent complete with respect to materials } & 50 \% \\\hline \text { Percent complete with respect to cormersion } & 20 \% \\\hline\end{array}\end{array}$ Using the FIFO method: a.Determine the equivalent units of production for materials and conversion costs.b.Determine the cost per equivalent unit for materials and conversion costs.c.Determine the cost of ending work-in-process inventory.d.Determine the cost of units transferred out of the department during the month.

The following data have been provided by Florrisant Corporation,which uses the weighted-average method in its process costing.The data are for the company's Assembly Department for October. Required: Compute the equivalent units of production for both materials and conversion costs for the Assembly Department for October using the weighted-average method.

Which of the following statements concerning a process cost accounting system is false?

The debits to Work-in-Process for Department #2 for the month of April of the current year,together with information concerning production,are presented below. $\begin{array}{l}\text { WOFKHNPPROCESS - DEPARTMENT \#2 }\\\begin{array} { | l | r | l | l | } \hline \begin{array} { l } 1,200 \text { units, } 1 / 4 \\\text { completed }\end{array} & \$ 1,200 & \begin{array} { l } \text { Product } X , 6,200 \\\text { units }\end{array} & ? ? ? ? \\\hline \begin{array} { l } \text { From Dept. 1, 6,000 } \\\text { units }\end{array} & 3,600 & & \\\hline \text { Direct Labor } & 8,000 & & \\\hline \text { Factory } \mathrm { OH } & 4,800 & & \\\hline \begin{array} { l } 1,000 \text { units, } 1 / 2 \\\text { complete }\end{array} & ? ? ? ? & & \\\hline\end{array}\end{array}$ All direct materials come from Department #1.The units completed include the 1,200 in process at the beginning of the period.Department #2 uses FIFO costing.The cost of goods transferred to finished goods is:

The Safety Chemical Company produces a special kind of body oil that is widely used by professional sports trainers.The oil is produced in three processes: $\begin{array}{l}\text { Work-in-Process: Blending }\\\begin{array} { | l | r | } \hline \text { Beginning balance (8,000 gal, } 30 \% \text { complete) } & \$ 22,850 \\\hline \text { Costs transterred in from Refining ( } 29,000 \text { gal.) } & 48,200 \\\hline \text { Materials } & 20,810 \\\hline \text { Direct labor } & 5,748 \\\hline \text { Overhead } & 11,600 \\\hline \text { Ending balance (4,000 gal, } 40 \% \text { complete) } & \\\hline\end{array}\end{array}$ Refining,Blending,and Mixing.Raw oil materials are introduced at the beginning of the refining process.A "mountain-air scent" material is added in the blending process when processing is 50% completed.The following Work-in-Process account for the Blending Department is available for the month of July.The July 1 Work-in-Process inventory contains $5,920 in material costs,and $1.56/unit in costs transferred in from the Refining Department.The Safety Chemical Company uses weighted-average costing.Required (use 4 decimal places for computations): (a)Compute the equivalent units of production for Blending.(b)Compute the unit costs in the Blending Department for the month of July.(HINT: There are three!!) (c)Compute the costs transferred out to the Mixing Department for July.(d)Compute the July 31 Work-in-Process Inventory balance.