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Exam 20: Process Costing

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Question 41

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Michael Paints has two processes-Coloring Department and Mixing Department. Michael sold 200 gallons of paint for $220,000 of which $150,000 was sold on account. The total cost of processing was $385,000 for 5,500 gallons of paint. What are the journal entries to record a sale if Michael follows a process costing system?

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Question 42

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Nevada Manufacturing has two processing departments, Department I and Department II. The raw materials processed at Department I are sent to Department II for further processing. During June, direct materials worth $50,000 purchased on account were assigned to Department I. The journal entry to record issue of direct materials to production is:

A) debit Work-in-Process Inventory-Department I, $50,000; credit Raw Materials Inventory, $50,000.
B) debit Raw Materials Inventory, $50,000; credit Work-in-Process Inventory-Department I, $50,000.
C) debit Work-in-Process Inventory-Department I, $50,000; credit Accounts Payable, $50,000.
D) debit Accounts Payable, $50,000; credit Work-in-Process Inventory-Department I, $50,000.

E) All of the above
F) A) and D)

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Question 43

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At the start of June, the Polishing Department of Wood Shiners had 15,000 units in beginning inventory which were 100% complete with respect to direct materials and conversion costs. During the month, it received 25,000 units from the Machining Department. It started and completed 17,000 units and transferred 32,000 units to the Packaging Department. It had 8,000 units in ending Work-in-Process Inventory. Direct materials are added at the beginning of the process. Units in ending Work-in-Process Inventory were 40% complete with respect to conversion costs. Prepare the production cost report for the Polishing Department for the equivalent units of production for the month of June. Use the FIFO method.

LDR Manufacturing produces a pesticide chemical and uses process costing. There are three processing departments-Mixing, Refining, and Packaging. On January 1, 2014, the first department, Mixing, had no beginning inventory. During January, 40,000 fl. oz. of chemicals were started in production. Of these, 32,000 fl. oz. were completed and 8,000 fl. oz. remained in process. In the Mixing Department, all direct materials are added at the beginning of the production process and conversion costs are applied evenly through the process. At the end of January, the equivalent unit data for the Mixing Department were as follows: In addition to the above, the costs per equivalent unit were $5.50 for direct materials and $3.60 for conversion costs. Using this data, calculate the full cost of the ending balance in the Mixing Department.

Under a process costing system, a production cost report helps managers in decision making.

A production cost report can help managers in identifying the most profitable products.

The number of equivalent units for direct materials and conversion costs must always be equal.

Organic Sugar Company at Ohio has six processing departments for refining sugar: Affination, Carbonatation, Decolorization, Boiling, Recovery, and Packaging. Conversion costs are added evenly throughout each process and materials are added at the beginning of each process. Data from the month of August for the Recovery Department are as follows: In August, 15,000 metric tons were completed and sent to the Packaging Department. The ending Work-in-Process Inventory was 50% complete with respect to conversion costs. Prepare a production cost report for the Recovery Department to show the equivalent units for direct materials and conversion costs.

Jacob Company has four processing departments and follows a process costing system. It incurred $150,000 in machinery depreciation and $60,000 in indirect costs that were paid in cash. Provide the journal entry(ies)to record these transactions.

The costs that were incurred in a previous process and brought into a later process as part of the product's cost are called "________" costs.

Under process costing, a single Work-in-Process Inventory account is maintained for all processes, with a subsidiary ledger containing individual production cost reports for each process.

In a process costing system, production costs are:

Under process costing, the number of units to account for must always be ________ the number of units accounted for.

Under process costing, the costs incurred by each department are recorded in a separate production cost report for each department.

When indirect materials are issued to production, the Raw Materials Inventory account is credited.

A report prepared by a processing department for equivalent units of production, production costs, and the assignment of those costs to the completed and in process units is called a(n) :

LDR Manufacturing produces a pesticide chemical and uses process costing. There are three processing departments-Mixing, Refining, and Packaging. On January 1, 2014, the first department, Mixing, had no beginning inventory. During January, 40,000 fl. oz. of chemicals were started in production. Of these, 32,000 fl. oz. were completed and 8,000 fl. oz. remained in process. In the Mixing Department, all direct materials are added at the beginning of the production process and conversion costs are applied evenly through the process. At the end of the month, LDR calculated equivalent units. The ending inventory in the Mixing Department was 60% complete with respect to conversion costs. With respect to conversion costs, how many equivalent units were calculated for the product that was completed and for ending inventory?

During August, the Filtering Department of Olive Company had beginning transferred in units of 200 with costs of $50,000. 500 units were started in production during the month. It had 100 units in ending Work-in-Process Inventory. Under the first-in, first-out (FIFO) method, current-period equivalent units of production for transferred in units in beginning Work-in-Process Inventory of the Filtering Department is:

Muses Manufacturing produces plastic toys and uses process costing. There are three processing departments-Assembling, Finishing, and Packaging. On January 1, 2012, the Finishing Department had 2,000 units of partially processed product in production. During January, 32,000 units were transferred in from the Assembling Department and 29,000 units were completed and transferred out. At the end of the month, there were 5,000 units of partially processed products remaining in the Finishing Department. See additional details below. Finishing Department, ending balance at January 31, 2012 For the Finishing Department, what was the number of equivalent units for the month of January, with respect to direct materials?

Which of the following statements is true of process costing?