Question 1

Use the information below to answer the following question(s).Father Time Clock Shop manufactures clocks on an automated assembly line.It utilizes two cost categories: direct materials and conversion costs.Each product must pass through the Assembly Department and the Testing Department.Direct materials are added at the beginning of production, while conversion costs are allocated evenly throughout production, and the company uses weighted-average costing.Data for the Assembly Department are:
 
-Which of the following entries would be made to record the issue of direct materials in the Testing Department, under process-costing?

Accepted Answer

In process-costing, the direct materials are initially added to the Work in Process account of the relevant department (Assembly Department in this case). Once the product moves to the next department (Testing Department), the cost of direct materials is transferred from the Work in Process account of the Assembly Department to the Work in Process account of the Testing Department. Therefore, the entry to record the issue of direct materials in the Testing Department would be a debit to Work in Process - Testing Department.

Question 2

The final result of the process costing procedure is to compute the dollar amount of the credit to a work-in-process account and the corresponding debit to finished goods and/or other work-in-process accounts.

Accepted Answer

This statement is true. The process costing procedure involves calculating the total cost of production for a particular period and allocating that cost to the various work-in-process and finished goods accounts. The final step is to debit finished goods and/or other work-in-process accounts and credit the work-in-process account for the total cost of production.

Question 3

List and describe the five steps in process costing.

Accepted Answer

The answer of List and describe the five steps in...

Question 4

When a bakery transfers goods from the Baking Department to the Decorating Department, the accounting entry is

Accepted Answer

The most appropriate accounting entry for a transfer of goods from one department to another is a journal entry that debits the receiving department's inventory account and credits the sending department's inventory account. Based on the options given, the only entry that fits this description is option C, 11ea82f3_8c28_5ac9_971a_b157536aa8ad_TB3086_00.

Question 5

Excalibur Ltd.began operations on October 1 of the current year.Its production requires that direct materials are added at the beginning of the process and conversion costs are incurred uniformly.Direct materials costs for October were $380,000 and conversion costs were $1,750,000.There were 80,000 units started during the month.The ending inventory was 25,000 units which were 60% complete.The cost per equivalent unit for direct materials was

Accepted Answer

The answer of Excalibur Ltd.began operations on October 1 of...

Question 6

A key feature in process costing is that

Accepted Answer

In process costing, the total costs incurred in a production process are divided by the total equivalent units to determine the cost per unit of production. This method assumes that all units produced are identical and that costs are spread evenly across all units. Thus, the total costs are allocated based on the total equivalent units rather than individual units or percentage allocations.

Question 7

Unit costs do not fluctuate between periods.

Accepted Answer

Unit costs can fluctuate between periods due to changes in production volume, input prices, efficiency, and other economic factors.

Question 8

Excalibur Ltd.began operations on October 1 of the current year.Its production requires that direct materials are added at the beginning of the process and conversion costs are incurred uniformly.Direct materials costs for October were $380,000 and conversion costs were $1,750,000.There were 80,000 units started during the month.The ending inventory was 25,000 units which were 60% complete.The cost per equivalent unit for conversion was

Accepted Answer

The answer of Excalibur Ltd.began operations on October 1 of...

Question 9

Process-costing journal entries and job-costing journal entries are similar except for the multiple work-in-process accounts in the job-costing system.

Accepted Answer

In a process-costing system, there are typically multiple work-in-process accounts for each production department, whereas in a job-costing system, there is usually a single work-in-process account for each job.

Question 10

The accounting (for a bakery)entry to record the transfer of rolls from the mixing department to the baking department is:

Accepted Answer

The answer of The accounting (for a bakery)entry to record...

Question 11

In the weighted-average costing method, the costs of direct materials in beginning inventory are not included in the cost per unit calculation since direct materials are almost always added at the start of the production process.

Accepted Answer

The statement is false. The costs of direct materials in beginning inventory are included in the cost per unit calculation under weighted-average costing method.

Question 12

The weighted-average process costing method assigns the cost of the earliest equivalent units available to units completed and transferred out, and the cost of the most recent equivalent units worked on during the period to ending work-in-process inventory.

Accepted Answer

The weighted-average process costing method combines costs from the beginning inventory and current period, averaging them to assign costs to units completed and ending work-in-process, rather than distinguishing between earliest and most recent costs.

Question 13

The Bygon Corporation was recently formed to produce a semiconductor chip that forms an essential part of the cell phone manufactured by a major corporation.The direct materials are added at the start of the production process while conversion costs are added uniformly throughout the production process.June is Bygon's first month of operations, and therefore, there was no beginning inventory.Direct materials cost for the month totaled $743,750, while conversion costs equaled $3,403,000.Accounting records indicate that 425,000 chips were started in June and 395,000 chips were completed.Ending inventory was 50% complete as to conversion costs.Required:
a.What is the total manufacturing cost per chip for June?
b.Allocate the total costs between the completed chips and the chips in ending inventory.

Accepted Answer

The answer of The Bygon Corporation was recently formed to...

Question 14

The Zygon Corporation was recently formed to produce a semiconductor chip that forms an essential part of the personal computer manufactured by a major corporation.The direct materials are added at the start of the production process while conversion costs are added uniformly throughout the production process.June is Zygon's first month of operations, and therefore, there was no beginning inventory.Direct materials cost for the month totaled $895,000, while conversion costs equaled $4,225,000.Accounting records indicate that 475,000 chips were started in June and 425,000 chips were completed.Ending inventory was 50% complete as to conversion costs.Required:
a.What is the total manufacturing cost per chip for June?
b.Allocate the total costs between the completed chips and the chips in ending inventory.

Accepted Answer

The answer of The Zygon Corporation was recently formed to...

Question 15

Cedar Rapids Chemical placed 220,000 liters of direct materials into the mixing process.At the end of the month, 10,000 liters were still in process, 30% converted as to labour and factory overhead.All direct materials are placed in mixing at the beginning of the process and conversion costs occur evenly during the process.Cedar Rapids Chemical uses weighted-average costing.Required:
Determine the equivalent units in process for direct materials and conversion costs, assuming there was no beginning inventory.

Accepted Answer

The answer of Cedar Rapids Chemical placed 220,000 liters of...

Question 16

Treated Lumber Company specializes in processing treated wood.All direct materials are included at the inception of the sawing process and conversion is applied at the end of the process.For December there was no beginning inventory in the sawmill.Direct materials totalled $399,750 for the month and conversion costs totalled $165,000.work-in-process records revealed that 75,000 boardmetres were started in December and that 55,000 boardmetres were completed.Ending work-in-process units are complete only in respect to direct materials costs.Required:
a.What is the total manufacturing cost per equivalent unit (boardmetres)for December?
b.What are the costs assigned to completed boardmetres in December?
c.What are the costs transferred out during December?
d.What are the amounts assigned to December's ending work-in-process inventory?

Accepted Answer

The answer of Treated Lumber Company specializes in processing treated...

Question 17

The weighted-average process costing method distinguishes between units started in the previous period but completed during the current period and units started and completed during the current period.

Accepted Answer

The weighted-average process costing method does not distinguish between units started in the previous period and completed in the current period and units started and completed during the current period; it averages costs over all units.

Question 18

Which of the following is false concerning equivalent units?

Accepted Answer

Equivalent units are not always equal to physical units. For example, if a certain amount of direct materials are added in one department, those materials may not be fully processed and may require further work in the department before they are considered complete. In this case, the equivalent units for direct materials would be greater than the actual physical units added.

Question 19

In the weighted-average method, costs of units completed and transferred out, and in ending work-in-process, are calculated using average total costs obtained after merging costs of beginning work-in-process and costs added in the current period.

Accepted Answer

This accurately describes the weighted-average method of costing.

Question 20

The Parson Valve Corporation was recently formed to produce a brass valve that forms an essential part of a compressor manufactured by a major corporation.The direct materials are added at the start of the production process while conversion costs are added uniformly throughout the production process.September is Parson's first month of operations, and therefore, there was no beginning inventory.Direct materials cost for the month totaled $1,400,000, while conversion costs equaled $1,800,000.Accounting records indicate that 800,000 valves were started in September and 700,000 valves were completed.Ending inventory was 20% complete as to conversion costs.Required:
a.What is the total manufacturing cost per valve for September?
b.Allocate the total costs between the completed valves and the valves in ending inventory.

Accepted Answer

The answer of The Parson Valve Corporation was recently formed...

Quiz 17: Process Costing