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Exam 18: Process Cost Systems

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Question 91

Multiple Choice

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Equivalent production units, usually are determined for

A) direct materials and conversion costs.
B) direct materials only.
C) conversion costs only.
D) direct materials and direct labor costs only.

E) C) and D)
F) A) and C)

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Question 92

Multiple Choice

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If a company uses a process costing system to account for the costs in its four production departments, how many Work-in-Process will it use?

A) 3
B) 4
C) 1
D) 2

E) C) and D)
F) None of the above

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Question 93

Multiple Choice

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Department B had 3,000 units in Work in Process that were 25% completed at the beginning of the period at a cost of $12,500. 13,700 units of direct materials were added during the period at a cost of $28,700. 15,000 units were completed during the period, and 1,700 units were 95% completed at the end of the period. All materials are added at the beginning of the process. Direct labor was $32,450 and factory overhead was $18,710. The number of equivalent units of production for the period for conversion if the first-in, first-out method is used to cost inventories was:

In a process cost system, the amount of work in process inventory is valued by:

Both process and job order cost systems maintain perpetual inventory accounts with subsidiary ledgers.

Department G had 3,600 units, 25% completed at the beginning of the period, 11,000 units were completed during the period, 3,000 units were one-fifth completed at the end of the period, and the following manufacturing costs were debited to the departmental work in process account during the period: Assuming that all direct materials are placed in process at the beginning of production and that the first-in, first-out method of inventory costing is used, what is the total cost of the units "started and completed" during the period (round unit cost calculations to four decimal places) ?

When a firm adopts a just-in-time operating environment,

Direct materials, direct labor, and factory overhead are assigned to each manufacturing process in a process costing system.

If the products of a manufacturing process are produced to customer specifications, a process cost system is more appropriate than a job order cost system.

Process cost systems use job order cost cards to accumulate cost data.

Mocha Company manufactures a single product by a continuous process, involving three production departments. The records indicate that direct materials, direct labor, and applied factory overhead for Department 1 were $100,000, $125,000, and $150,000, respectively. The records further indicate that direct materials, direct labor, and applied factory overhead for Department 2 were $55,000, $65,000, and $80,000, respectively. In addition, work in process at the beginning of the period for Department 1 totaled $75,000, and work in process at the end of the period totaled $60,000. The journal entry to record the flow of costs into Department 1 during the period for direct materials is:

Using the FIFO method, the cost of goods completed and transferred out during July was (use average cost per unit rounded to four decimal places in computations)

The Mountain Springs Water Company has two departments, Purifying and Bottling. The Bottling Department had 3,000 liters in beginning work in process inventory (30% complete). During the period 71,000 liters were completed. The ending work in process was 5,000 liters (70% completed). What are the total equivalent units for direct materials (using the FIFO method) if materials were added at the beginning of the process?

The direct materials costs and direct labor costs incurred by a production department are referred to as conversion costs.

In a process costing system, indirect materials are charged to Work in Process.

The closer a company moves towards Just in Time production, the differences in unit costs between average costing and FIFO will be reduced.

Which of the following costs incurred by a paper manufacturer would NOT be included in the group of costs referred to as conversion costs?