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Exam 20: Process Cost Systems

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Question 91

True/False

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Conversion and direct materials are generally both added at the end of the production process.

A) True
B) False

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Question 92

Multiple Choice

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The cost system best suited to industries that manufacture a large number of identical units of commodities on a continuous basis is:

A) process
B) departmental
C) first-in, first-out
D) job order

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

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Question 93

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The Brass Works is in the process of determining manufacturing overhead. Journalize events (a) - (d) to Factory Overhead, Miscellaneous Expense, or allocated between the two as appropriate. All items were paid in cash at the time of acquisition. Next calculate the overhead application rate and apply overhead to Work-in-Process. Round overhead rate to four decimal places and total cost to nearest dollar.

Both process and job order cost systems maintain perpetual inventory accounts with subsidiary ledgers.

If the costs for direct materials, direct labor, and factory overhead were $522,200, $82,700, and $45,300, respectively, for 16,000 equivalent units of production, the conversion cost per equivalent unit was $8.00.

Costs are transferred, along with the units, from one work in process inventory account to the next in a process costing system.

A firm produces its products by a continuous process involving three production departments, 1 through 3. Present entries to record the following selected transactions related to production during August:

Kamin Company's mixing department had a beginning inventory of 4,000 units which had accumulated conversion costs of $55,000. During the period, the mixing department accumulated conversion costs of $92,000 and started 8,000 new units. Ending inventory was 2,500 units which were 40% complete with respect to conversion costs. Kamin uses the average cost method to cost inventories. Required: Calculate the cost per equivalent unit for conversion costs in the mixing department.

In a process costing system, each process will have a work in process inventory account.

According to the just-in-time philosophy,

Custom-made goods would be accounted for using a process costing system.

A process cost accounting system records all actual factory overhead costs directly in the Work in Process account.

In a process cost system, the amount of work in process inventory is valued by:

The cost of direct materials transferred into the Bottling Department of the Mountain Springs Water Company is $28,072. The conversion cost for the period in the Bottling Department is $10,275. The total equivalent units for direct materials and conversion are 63,800 and 68,500 respectively. Determine the direct materials and conversion cost per equivalent unit. Round answers to nearest cent.

Which of the following is NOT a way in which process and job order cost systems are similar?

Companies that use the average costing method for process costing have unit costs that include costs from more that one accounting period.

Which of the following costs incurred by a paper manufacturer would be included in the group of costs referred to as conversion costs?