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Exam 20: Process Cost Accounting

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Question 61

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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. Compute equivalent units for direct materials, direct labor and overhead for June.

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Question 62

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If the predetermined overhead allocation rate is 85% of direct labor cost, and the Painting Department's direct labor cost for the reporting period is $20,000, the following entry would be made to record the allocation of overhead to the products processed in this department:

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Question 63

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When the completed goods are sold, the cost of the completed goods are transferred to ___________________.

During the year, RB Corp. introduced 132,000 units into production and 144,000 units were completed and transferred to finished goods. At the end of the year, the company had 13,600 units in process that were 80% complete. Determine how many units the company had in goods in process at the beginning of the year.

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.

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 ___________________).

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.

Hybrid systems contain aspects of both process and job order operations.

When raw materials are purchased on account for use in a process costing system, the corresponding journal entry that should be recorded will include:

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.

What is a hybrid costing system? When is a hybrid costing system appropriate for a manufacturer?

The cost of units transferred from Goods in Process Inventory to Finished Goods Inventory is called the cost of goods manufactured.

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

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

What is meant by equivalent units of production, and why are they important when a process cost accounting system is used?

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. 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.

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

In process cost accounting, direct labor includes only the labor that is applied directly to the products.

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.

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: