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Process costing assumes all units are homogeneous and follow the same path through the production process.
The number of units in the beginning Work-in-Process Inventory plus the units transferred out during the period equals the number of units started during the period plus the number of units in the ending Work-in-Process Inventory.
If materials are added continuously throughout the production process, then the equivalent units for materials will normally equal the equivalent units for the conversion costs.
If materials are only added at the beginning of the production process, then the degree of completion for materials in the ending Work-in-Process Inventory is always 100%.
If materials are only added at the end of the production process, then the degree of completion for materials of units in the ending Work-in-Process Inventory is always 0%.
The weighted-average approach to process costing combines the work and costs done in prior periods with the work and costs done in the current period.
The more prices change, the greater the difference between the costs assigned to units transferred out using weighted-average costing and the costs assigned to units transferred out using first-in, first-out (FIFO).
In general, weighted-average costing is simpler to use while first-in, first-out (FIFO) costing provides greater decision-making benefits to managers.
An equivalent unit of conversion costs is equal to the amount of conversion costs required to
start and complete a unit
Which of the following statements concerning a process cost accounting system is false?
The units in beginning inventory plus the units transferred out during the month should equal the units in the ending inventory plus the units transferred in during the month.
In the computation of the manufacturing cost per equivalent unit, the weighted average method of process costing considers
current costs plus cost of beginning Work-in-Process Inventory
Blue Company has beginning and ending Work-in-Process Inventories that are 45% and 10% complete, respectively. Materials are added at the beginning of the process. If first-in, first-out (FIFO) process costing is used, the total equivalent units for materials will equal the number of units
started into the process during the period.
An error was made by ROC Company in computing the percentage-of-completion of the current year's ending Work-in-Process Inventory. The error resulted in the assignment of a lower percentage of completion to each component of the inventory than actually was the case. There was no beginning Work-in-Process Inventory. What is the effect of this error on (1) cost assigned to cost of goods completed for the period and (2) the computation of costs per equivalent unit?
Additional materials are added in the second department of a four-department production process. However, this addition does not increase the number of units being produced in the second department, but will
increase the total cost per unit.
Under which of the following conditions will the FIFO method produce the same cost of goods manufactured as the weighted-average method?
There is no beginning inventory.
Which of the following statements is (are) true?
I. For cost control, the FIFO method of process costing is better than the weighted-average method.
II. The weighted-average method of process costing assigns more cost to units completed (transferred out) than the FIFO method.
Which of the following statements is (are) false?
(A) Operations costing accounts for material costs like job costing and conversion costs like process costing.
(B) An automobile manufacturer is more likely to use an operations costing system than a process costing system.
Neither A nor B.
Predetermined manufacturing overhead rates can be used in all of the following costing systems except
ABC Company has a beginning Work-in-Process Inventory of 25,000 units (40% complete). During the period, 110,000 units were started and the ending Work-in-Process Inventory consisted of 20,000 units (80%). What are the equivalent units for conversion costs using weighted-average process costing?
Sussex Corporation's production cycle starts in the Mixing Department. The following information is available for April:
Work in process April 30 (60% complete) 25,000
Total units in process during April 280,000
Work in process April 1 (25% complete) 40,000
Materials are added at the beginning of the process in the Mixing Department. What are the equivalent units of production for the month of April, assuming Sussex uses the weighted average method?
Department A had no Work-in-Process at the beginning of the period, 1,000 units were completed during the period, 200 units were 50% completed at the end of the period, and the following manufacturing costs were debited to the departmental Work-in-Process account during the period
Direct Materials (1,200 at $10) $12,000
Direct Labor $5,500
Factory Overhead $4,400
Assuming that all direct materials are placed in process at the beginning of production and Department A uses weighted-average process costing, what is the total cost of the departmental Work-in-Process Inventory at the end of the period?
The Finishing Department had 5,000 incomplete units in its beginning Work-in-Process Inventory which were 100% complete as to materials and 30% complete as to conversion costs. 15,000 units were received from the previous department. The ending Work-in-Process Inventory consisted of 2,000 units which were 50% complete as to materials and 30% complete as to conversion costs. The Finishing Department uses first-in, first-out (FIFO) process costing.
How many units were transferred-out during the period?
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