Process Costing

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Process Costing Questions and Answers

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How are equivalent units useful when assigning costs to products manufactured in a process environment?
What is the point of equivalent units in process costing?
A pair of jeans cost $42.95 and it is increased by 25%. What would its cost be?
The topsoil costs $6$ per cubic foot. What is the cost, in dollars, of 5 cubic yards of topsoil?
Luigi's Calzone is a price taker. Its costs are: Output (Plates per day) Total Cost 0 0 1 28 2 38 3 51 4 70 5 91 6 130 What is Luigi's shut-down point?
Suppose total benefits and total costs are given by B(Y) = 100Y- 8Y^2 and C(Y) = 10Y^2. What level of Y will yield the maximum net benefits?
The Cutting Department has $6,500 units in process at the end of September that are 100% complete for direct materials and 85% complete for conversion costs. Calculate the equivalent units of produ...
Consider the following production function: q = 100 L^(0.5) K^(0.5). Currently the wage rate (w) is $20.00 and the price of capital (r) is $5.00. If the firm is using 100 units of capital in produc...
Find the price function and then the TR function of STC = 20,000 + 200Q - 9Q^2 + 1/3Q^3.
Manufacture MTN has orders for about 100,000 units of its product for the entire year and has the capability of producing 500 units per day. MTN operates its facility 250 days per year. Setting up...
In a process costing system, the costs are added: A. As each process or step in the production cycle occurs. B. Once at the beginning of the production process. C. As the individual job moves thr...
Victory Company uses a weighted-average process costing to account for its production costs. Direct labor is added evenly throughout the process. Direct materials are added at the beginning of the...
Is it possible to increase the temperature of a gas without adding heat to it? If so, how?
Swift Company had no beginning inventory and adds all materials at the very beginning of its only process. Assume 20,000 units were started, and 10,000 units were completed. Ending work in process...
The price of the typical MP3 player (such as the iPod) has been going down in the past 10 years. What could explain this consistent drop in the price of MP3 players? Use the model for the long-run...
In your own words, discuss how managers use information they obtain from process costing.
What are the pros and cons of the process costing method of accounting?
In process costing, the equivalent units computed for materials is generally the same as that computed for conversion costs. True False
Using an example, calculate the price of labor and the price of capital by displaying diagrammatically two countries A and B. Also, by using labor along the horizontal axis, and capital along the v...
The mixing department has 19,000 units and $90,550 in costs for which to account. Of the 19,000 units, 10,000 were completed and transferred to the next department. The 9,000 remaining were 25% com...
If the beginning and ending work inventories are $ 6400 and $ 16400 respectively, and the cost of goods manufactured is 184000 what is the total manufacturing costs for the period?
Lamont Company produced 80,000 machine parts for diesel engines. There were no beginnings or ending work-in-process inventories in any department. Lamont incurred the following costs for May: Mold...
Vandergrass Company has a production process where two products result from a joint processing procedure. Both can be sold immediately or processed further. Which of the products should be processe...
In the Shaping Department of Furs Industries, the unit materials cost is $5.00 and the unit conversions cost is $3.00. The department transferred out 12,000 units and had 1,500 units in ending work...
A chemical company has a commodity-grade and premium-grade product. Why might the company elect to process the commodity-grade product further to the premium-grade product?
Which of the following firms would most likely use a process costing system? a. Firm providing legal service b. Firm manufacturing papers c. Firm providing advertising services d. Firm printing wed...
1) What are the major differences between job costing and process costing? 2) Which types of companies would use job costing rather than process costing? Why?
With a process costing system, what risks might occur in identifying cost overruns in the process? Is overhead a particularly high-risk cost over run area? Explain.
There were 2,000 pounds in process at the beginning of the period in the Finishing Department. The department received (direct materials) 22,000 pounds from the Blending Department during the perio...
Polk Company manufactures basketballs. Materials are added at the beginning of the production process and conversion costs are incurred uniformly. Production and cost data for the month of July 201...
Describe how variable costs (total and unit) and fixed costs (total and unit) behave with changes in the level of activity.
Operations costing systems are used when the products have: A. used a standardized method that is repeatedly performed. B. common characteristics and no individual characteristics. C. individual...
What was the cost of the Truth and Reconciliation Commission?
In a process costing system, the entry to record the use of direct materials in production would include which of the following? a. Debit to work in process inventory b. Credit to finished goods in...
Wallace Company had the following data for the current fiscal period: Units in process at the beginning of the month 6,000 Units in process at the end of the month 4,000 Units started during the m...
Justin Company had the following data for the current fiscal period: Units in process at the beginning of the month 6,000 Units in process at the end of the month 4,000 Units started during the mo...
Beginning inventory in April consisted of 10,000 units (60 percent converted) and ending inventory consisted of 20,000 units (30 percent converted). In addition, 50,000 units were started during th...
On September 1, the production department had 18,000 units 45% complete as to labor and overhead; materials are added at the beginning of the process. During September, 90,000 units were started. A...
Beginning inventory of goods in process was 1,000 units that were 30% complete as to labor and overhead and 5,050 units were started during the period. Ending goods in process were 250 units, each...
Define Process order costing. Trace the flow of costs through a process order costing system. Explain the concept and calculation of equivalent units of production. Discuss the production report as...
Dorchester Company, on March 1, 2019 has a beginning Work in Process inventory of zero. All materials are added into production at the beginning of its production. There is only one production WIP...
How to get the % of Completion with respect to the Conversion?
Consider a perfectly competitive industry with a market demand given by Q^D = (12,000 - 100P)/9. There are 100 identical firms in the industry, each with a cost function TC(q) = q^2 + 10q + 100. a....
Gary Corporation produces products X, Y, and Z from a single raw material input. Budgeted data for the next month is as follows: Product X Product Y Product Z Units produced 2,400 2,900 3,900 Per...
The Rolling Department of Oak Ridge Steel Company had 4,100 tons in beginning work in process inventory (10% complete) on July 1. During July, 68,800 tons were completed. The ending work in process...
If the cost per equivalent unit is $1.50, how many physical units are there if the total cost is $31,500.00 and the physical units are 50% complete?
In a production cost report using process costing, transferred-in costs are similar to: a. Materials costs added at the end of the process. b. Materials costs added at the beginning of the process....
The Slicing Department production process shows: Units Beginning Work in Process = 9,800 Ending Work in Process = 50,600 Total units to be accounted for = 180,500 How many units were started int...
What information is required to find the final cost for direct material, direct labor, and manufacturing overhead?
Adams Corporation manufactures bicycle parts. The company currently has a $21,000 inventory of parts that have become obsolete due to changes in design specifications. The parts could be sold for $...
Which of the following is not a method of allocating joint costs? A. Sales value at split-off B. Net realizable value C. By-product method D. Physical-measures method
Which of the following companies would most likely use a process costing system? A. A large computer manufacturer where each computer is made to customer specifications. B. A luxury home builder C....
Process costing assumes all units are homogeneous and follow the same path through the production process. True False
Direct materials is an example of a traceable cost. True False
Arden Company reported the following costs and expenses for the most recent month: Direct materials $ 81,000 Direct labor $43,000 Manufacturing overhead $20,000 Selling expenses $23,000 Administra...
A company makes lenses for telescopes. Because the company will only sell lenses of the highest quality, the normal spoilage during a reporting period is 1,000 units. At the beginning of the curren...
Alpha Company, on March 1, 2017, has a beginning Work in Process inventory of zero. All materials are added into production at the beginning of its production. There is only one production WIP inve...
Walbin Corporation uses the weighted-average method in its process costing system. The beginning work in process inventory in a particular department consisted of 12,000 units, 100% complete with r...
An advertising campaign would cost $200,000. It is believed that it would result in either a $400,000 or a $100,000 increase in profit. The probabilities of these two outcomes are 0.3 and 0.7, resp...
Which of the following businesses uses a process costing system? a. An interior designing firm. b. A dental clinic. c. A printing business. d. An automobile service center. e. A refinery.
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