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Exam 20: Process Costing

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Question 51

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LDR Manufacturing produces a pesticide chemical and uses process costing. There are three processing departments-Mixing, Refining, and Packaging. On January 1, 2012, the Refining Department had 2,000 gallons of partially processed product in production. During January, 32,000 gallons were transferred in from the Mixing Department and 29,000 gallons were completed and transferred out. At the end of the month, there were 5,000 gallons of partially processed product remaining in the Refining Department. See additional details below. Refining Department, beginning balance at January 1, 2012 $\begin{array} { | l | l | } \hline \text { Quantity: } & 2,000 \text { units (partially processed) } \\\hline \text { Cost: } & \$ 15,600 \text { of costs transferred in } \\\hline & \$ 1,900 \text { of materials cost } \\\hline & \$ 4,500 \text { of conversion cost } \\\hline & \$ 22,000 \text { total account balance } \\\hline\end{array}$ Costs added during January $\begin{array} { | l | r | } \hline \text { Cost of units transferred in: } & \$ 222,400 \\\hline \text { Direct materials cost } & \$ 45,000 \\\hline \text { Conversion cost } & \$ 93,750 \\\hline\end{array}$ Refining Department, ending balance at January 31, 2012 $\begin{array} { | l | l | } \hline \text { Quantity: } & 5,000 \text { units (partially processed) } \\\hline \% \text { completion for materials cost: } & 90 \% \\\hline \% \text { completion for conversion cost: } & 75 \% \\\hline\end{array}$ For the Refining Department in the month of January, what was cost per equivalent unit with respect to direct materials costs? Use the weighted-average method. (Round your calculations to the nearest cent.) A) $1.40 B) $3.00 C) $1.34 D) $7.00

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Question 52

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In a process costing system, each process or department has its own Work-in-Process Inventory account.

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Question 53

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Jacob Company incurred $7,000 for indirect labor in Department III. The journal entry to record indirect labor utilized is:

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

Which of the following best describes the term equivalent units?

The production cost reports show the calculations for the physical flows and the ________ flows of the products.

When indirect materials are issued to production, the Manufacturing Overhead account is credited.

Which of the following is used to calculate the number of units accounted for under first-in, first-out (FIFO) method of inventory valuation of process costing?

The Assembly Department of Smart Computers had 500 units of beginning inventory in the month of September and 2,000 units were transferred to it by the Production Department. The Assembly Department completed 1,000 units during the month and transferred them to the Packaging Department. Calculate the total number of units accounted for by the Assembly Department if it had 1,500 units in ending inventory.

The cost of units sold is recorded by debiting Cost of Goods Sold and crediting:

When finished products are sold, Sales Revenue is debited and Cost of Goods Sold is credited.

The ________ account is credited to adjust for overallocated overhead costs.

LDR Manufacturing produces a pesticide chemical and uses process costing. There are three processing departments-Mixing, Refining, and Packaging. On January 1, 2012, the first department, Mixing, had a zero beginning balance. During January, 40,000 gallons of chemicals were started into production. During the month, 32,000 gallons were completed, and 8,000 remained in process, partially completed. 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. During January, the Mixing Department incurred $48,000 in direct materials costs and $211,600 in conversion costs. At the end of the month, the ending inventory in the Mixing Department was 60% complete with respect to conversion costs. The total cost of product in ending inventory was: A) $211,600. B) $48,000. C) $37,200. D) $222,400.

Costs incurred on goods sold are transferred to the Cost of Goods Sold account from the:

Factory rent and utilities are debited to the:

Nevada Manufacturing has two processing departments, Department I and Department II. During 2014, direct materials worth $38,000 purchased on account were assigned to Department I. At the end of 2014, when the production cost report for Department 1 was prepared, Nevada assigned $46,000 to the units transferred from Department 1 to Department II. The journal entry to record the transfer of units to Department II will:

A process is one of a series of steps in manufacturing production, usually associated with making large quantities of similar items.

The Assembling Department of Mat Liners had 10,000 units in process in December beginning and received 30,000 units from the Sewing Department. During the month, it completed 20,000 units and transferred them to the Packaging Department. Calculate the number of units accounted for by the Assembling Department for December.

Iowa Inc. purchased raw materials for $6,000 and $25,000 for cash and on account, respectively. Provide the journal entry to record purchase of raw materials.

Michael Paints has two processes-Coloring Department and Mixing Department. Michael sold 350 gallons on account at $110 per gallon. The total cost of processing was $385,000 for 5,500 gallons of paint. Throughout the year, Michael used a predetermined overhead allocation rate to allocate $75,000 and $65,000 of indirect costs to the Coloring Department and Mixing Department, respectively. The actual overhead cost incurred amounted to $150,000 at the end of the year. Record the necessary journal entries for the sale of goods and for adjustment of over/underallocated manufacturing overhead at the end of the year.