Question 1

JIT (Just in time) methods are designed primarily to:

Accepted Answer

JIT (Just in time) methods are a philosophy of manufacturing that aims to reduce waste, improve quality, and increase efficiency by producing only what is needed, when it is needed. One key method to achieve this is to reduce inventory levels, so the best choice is B. While JIT methods can also lead to cost savings, improved product design, and more accurate product costs, these outcomes are not the primary focus of the approach.

Question 2

The following table was taken from Firm X's Production Cost Report: $\begin{array}{lr}
\text { Completed and transferred out units } & 44,000 \
\text { Ending work-in-process equivalent units } & 6,000 \
\text { Beginning work-in-process equivalent units } & 10,000
\end{array}$ What is the number of weighted-average equivalent units?

Accepted Answer

The number of weighted-average equivalent units is calculated by adding the completed and transferred out units (44,000) to the ending work-in-process equivalent units (6,000), without subtracting the beginning work-in-process equivalent units, resulting in 50,000.

Question 3

Amos and Son Manufacturing Company of Asheville, Tennessee, produces about 1,000 units of hand-crafted wooden chairs per month. Their chairs are known for quality and durability. Most of the chairs are marketed through two furniture outlets with over 200 stores in the southwestern United States. You have been hired as a cost consultant to recommend improvements in Amos and Son's process cost system, a system installed some fifty years ago. Since then, the number of product lines has increased tenfold, and the units sold each year have increased from 3,000 to 12,000. You discover a process cost system driven by volume only, with a single rate for factory overhead based on units produced.
Required:
Given these limited facts, explain what impact changing to an activity-based process costing/management system (ABC/ABM) would have on Amos and Son's costing and pricing activities.

Accepted Answer

The answer of Amos and Son Manufacturing Company of Asheville,...

Question 4

Units accounted for includes units completed and transferred out plus:

Accepted Answer

Units accounted for includes units completed and transferred out, as well as ending inventory on hand. Beginning inventory and units started would be included in the calculation of units to account for.

Question 5

If a firm has 1,200 completed and transferred out units, 200 equivalent units of beginning work in process and 500 ending work-in-process equivalent units, what is the total of equivalent units of production using the weighted-average method?

Accepted Answer

The equivalent units of production for a process are calculated by adding the units completed and transferred out to the equivalent units of the work-in-process inventory. In this case, the calculation would be:
Equivalent units of production = Units completed and transferred out + Equivalent units of ending work-in-process
Equivalent units of production = 1,200 + 500 = 1,700
Therefore, the answer is B.

Question 6

Backflush costing is a costing method that:

Accepted Answer

Backflush costing is a method of cost accounting that charges the current production costs directly to the finished goods inventory without considering the specific costs incurred for producing a particular unit or batch of the product. Therefore, option A is correct, which charges the current costs to the finished goods inventory, helping to simplify the accounting process by reducing the number of transactions and lessening the burden of record-keeping requirements. This method is ideal for companies that produce a high volume of identical products and don't require a high level of detail regarding the cost of production.

Question 7

Williams Corporation's Department A has the following information:  Required:
1.Use the FIFO method to calculate:
(a) Equivalent units.
(b) Cost per unit, rounded to three decimal places.
(c) Cost completed and transferred out, rounded to the nearest whole dollar.
(d) Cost in the ending work-in-process inventory, rounded to the nearest whole dollar.
2.Use the weighted-average method to answer a through d in requirement 1.

Accepted Answer

The answer of Williams Corporation's Department A has the following...

Question 8

Process costing is not intended to help determine

Accepted Answer

Process costing is designed to accumulate costs for continuous production processes, determining costs of individual products and departmental cost flows, not the profitability of a product mix. Profitability of a product mix involves analyzing the combined effects of selling multiple products, which goes beyond the scope of process costing.

Question 9

Edenton Boat Company manufactures small pleasure boats on an assembly-line basis. The units are started in the Department A. On July 1 of this year, the Work-in-Process inventory of the Department A consisted of 200 units 100% complete as to materials and 40% complete as to conversion. During the month, 400 units were started and 500 units were completed and transferred out. The Work-in-Process on July 31 was 100% complete as to materials and 30% complete as to conversion.
Costs in process at the beginning of the period amounted to $600,000 for materials and $160,000 for conversion. Costs added during the period were materials costs of $1,802,700 and conversion costs of $905,512.
Required:
Prepare a production cost report using the weighted-average method.

Accepted Answer

The answer of Edenton Boat Company manufactures small pleasure boats...

Question 10

Each of the following cases is independent.Use the FIFO method.  Required: Fill in the blanks.

Accepted Answer

The answer of Each of the following cases is independent.Use...

Question 11

Irvine Company uses process costing.The following data are available for the month of June.
(a) Materials purchased, $800,000.
(b) Materials used: Direct materials: Department A $250,000, Department B $230,000.Indirect materials: $20,000.
(c) Factory payroll incurred, $600,000: Direct labor: Department A $300,000, Department B $200,000.Indirect labor: $100,000.
(d) Other factory overhead incurred, $30,000: Power and light $2,000, Depreciation $20,000, Property tax $5,000, Insurance $3,000.
(e) Factory overhead cost was allocated equally to Department A and DepartmentB.
(f) Department A completed and transferred to department B $600,000.
(g) Department B completed and transferred to Finished Goods Inventory account $1,000,000.
Required:
(1) Prepare journal entries for June activities in Irvine Company.
(2) Compute ending working-in-process inventories in Department A and Department

Accepted Answer

The answer of Irvine Company uses process costing.The following data...

Question 12

Assad Company uses the process costing method with the following data for the month of July.  Required:
(1) Compute cost per equivalent unit under the weighted-average method.
(2) Compute cost per equivalent unit under FIFO method.

Accepted Answer

The answer of Assad Company uses the process costing method...

Question 13

Reichhold Chemical Company uses process costing together with:

Accepted Answer

The answer of Reichhold Chemical Company uses process costing together...

Question 14

Pierce Co. manufactures a single product that goes through two processes — mixing and cooking. The following data pertains to the Mixing Department for September.Material R is added at the beginning of work in the Mixing Department. Material S is also added in the Mixing Department, but not until units of product are thirty percent completed with regard to conversion. Conversion costs are incurred uniformly during the process. 
Required:
(1) Calculate the equivalent units for Material R using the weighted-average method.
(2) Calculate the equivalent units for Material S using the weighted-average method.
(3) Calculate the equivalent units for conversion using the weighted-average method.
(4) Calculate the unit costs using the weighted-average method.
(5) Calculate the cost of units completed and transferred out using the weighted-average method.
(6) Calculate the cost of ending work in process using the weighted-average method.

Accepted Answer

The answer of Pierce Co. manufactures a single product that...

Question 15

Bob and Nancy Barnett have recently expanded their television-based educational film business by shooting 30-second television ads for a regional television market in southern Colorado. They began business about 15 years ago with a contract to film training videos for the U.S. Army, and that business continues to provide a steady revenue base, currently about 40 percent of total revenue. Nancy Barnett is the firm's accountant, and in a visit to your accounting class last week, made a presentation detailing her firm's costing activities. Your instructor has asked you to respond to one particular statement that Nancy Barnett made: "Since our contract for military training films requires us to detail all costs, we use the process cost method that gives the maximum amount of fixed overhead cost. This almost covers all of our overhead, giving us an edge in competitively pricing our 30-second TV ads, and explains why we have grown so much in this sector of our business." Nancy knows that the U.S. Army uses cost-plus contracts on services like the Barnetts provide.
Required:
Is there an ethical problem with this approach? Does it represent acceptable accounting procedure?

Accepted Answer

The answer of Bob and Nancy Barnett have recently expanded...

Question 16

Transferred-in costs are costs of work performed:

Accepted Answer

Transferred-in costs refer to the costs of work performed in the preceding department that are transferred into the present department. Option A is incorrect as it refers to costs transferred from the current department of the last period. Option C is incorrect as it refers to costs from a prior period transferred in the current period. Option D is incorrect as it refers to costs incurred from outside suppliers.

Question 17

The weighted-average method is most appropriate when:

Accepted Answer

The weighted-average method is most appropriate when work in process is relatively small, conversion costs are stable, and direct materials prices are stable, as it averages the costs over the period.

Question 18

Many industries, for example mining and other extractive industries, use process costing to provide information regarding sustainability.
Required:
Provide an example of how a company could use process costing to assist in making decisions regarding sustainability.

Accepted Answer

The answer of Many industries, for example mining and other...

Question 19

The U.S.Department of Agriculture urges the use of process costing together with:

Accepted Answer

The U.S. Department of Agriculture recommends using process costing together with activity-based costing. This is because process costing is best suited to situations where large volumes of nearly identical products are produced, while activity-based costing provides a more accurate way to allocate costs to specific activities or processes. By combining the two methods, businesses can achieve a more accurate understanding of the costs associated with their production processes. Normal costing, volume-based costing, and standard costing are all useful methods for certain situations, but they are not specifically recommended by the USDA in conjunction with process costing.

Question 20

The following table was taken from Firm X's Production Cost Report: $\begin{array}{lr}
\text { Completed and transferred out units } & 44,000 \
\text { Ending work-in-process equivalent units } & 6,000 \
\text { Beginning work-in-process equivalent units } & 10,000
\end{array}$ What is the number of FIFO equivalent units?

Accepted Answer

The FIFO method calculates equivalent units by considering only the work done during the current period. Therefore, FIFO equivalent units = Completed and transferred out units (44,000) - Beginning work-in-process equivalent units (10,000) + Ending work-in-process equivalent units (6,000) = 40,000.

Quiz 6: Process Costing