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Exam 20: Process Costing

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Question 51

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Embark produces mulch for landscaping use.The following information summarizes production operations for June.The journal entry to record June production activities for direct labor usage is:

A) Debit Factory Payroll $160,000; credit Cash $160,000.
B) Debit Goods in Process Inventory $160,000; credit Factory Payroll $160,000.
C) Debit Cost of Goods Sold $160,000; credit Factory Payroll $160,000.
D) Debit Goods in Process Inventory $160,000; credit Raw Materials Inventory $160,000.
E) Debit Goods in Process Inventory $160,000; credit Cash $160,000.

F) B) and C)
G) A) and E)

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Question 52

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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 _____________________).

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Question 53

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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 ________________.

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.

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

The following journal entry would be made to record the use of $6,100 of direct labor in a production department during the reporting period: Factory Payroll …………………..6,100 Goods in Process Inventory………………………….6,100

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

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

A ____________________ contains features of both process and job order operations.

To compute equivalent units of production,one must be able to reasonably estimate:

During March,the production department of a process manufacturing system completed a number of units of a product and transferred them to finished goods.Of the units transferred,25,000 were in process at the beginning of March and 110,000 were started and completed in March.March's beginning inventory units were 100% complete with respect to materials and 55% complete with respect to labor.At the end of March,30,000 additional units were in process in the production department and were 100% complete with respect to materials and 30% complete with respect to labor.Compute the number of equivalent units with respect to both materials and direct labor respectively for March using the FIFO method.

If Department G uses $53,000 of direct labor and Department H uses $21,000 of direct labor,the following journal entry would be recorded using a process cost accounting system: Goods in Process Inventory,Department G ……..53,000 Goods in Process Inventory,Department H…..21,000 Factory Payroll…………………………… 74,000

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

A company uses the weighted average method for inventory costing.During a period,a production department had 20,000 units in beginning goods in process inventory which were 40% complete; the department completed and transferred 165,000 units.At the end of the period,22,000 units were in the ending goods in process inventory and are 75% complete.Compute the number of equivalent units produced by the department.

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

Why is the Process Cost Summary important to management and how does the Process Cost Summary accomplish its purposes?

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.

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 all units that were completed and transferred during August.

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.

A measure of the productivity of a process with respect to its use of direct materials,direct labor,or overhead,and an expression of the activity of a process as the number of units that would have been processed during a period if all effort had been applied to units that were started and finished during the period,is called: