A process cost summary is a managerial accounting report that describes:
A)The costs charged to a department.
B)The equivalent units of production by the department.
C)How the costs were assigned to the output.
D)Physical transfers for a department.
E)All of the options are correct.

Question

Quizplus · Accepted Answer

All 50,000 units in beginning Goods in Process were already 100% complete with respect to direct materials. The information indicates 225,000 units were begun during May. Since direct materials are added at the beginning of the process, those units were 100% complete with respect to direct materials by the end of May. Therefore, the equivalent units of production for direct materials for May was 225,000. The 50,000 units in beginning Goods in Process were only 40% complete with respect to conversion costs. Therefore, the remaining 60% or 30,000 units were completed in May as far as conversion costs are concerned. The information also indicates that 200,000 units were completed during May. That means that another 150,000 units were started and completed during May and were 100% complete with respect to conversion costs (200,000 - 50,000). Finally, there were 75,000 units in ending Goods in Process inventory and those units were 20% complete with respect to conversion costs. 75,000 units x 20% = 15,000 units. Therefore, the total equivalent units of production for conversion costs during May were 30,000 + 150,000 + 15,000 = 195,000.
Calculation: DM Cost per Equivalent Unit = DM costs for May / DM EUP
= $342,000 (given) / 225,000 units
= $1.52
CC per Equivalent Unit = CC for May / CC EUP
= $352,950 (given) / 195,000 units
= $1.81

A Process Cost Summary Is a Managerial Accounting Report That