p.20
Flow of Costs in Process Costing
What happens to the costs of completed units after processing in Department B?
The costs are transferred to the Finished Goods inventory account.
p.10
Flow of Costs in Process Costing
What tools are used to track the flow of raw material costs in the example?
T-accounts and journal entries.
p.50
Cost per Equivalent Unit Calculation
What is the formula for computing the cost per equivalent unit using the Weighted-Average Method?
Cost per equivalent unit = (Cost of beginning Work in Process Inventory + Cost added during the period) / Equivalent units of production
p.14
Flow of Costs in Process Costing
How are labor costs traced in process costing?
Labor costs are traced to departments, not to individual jobs.
p.14
Flow of Costs in Process Costing
What account is credited when recording labor costs in process costing?
Salaries and Wages Payable
p.19
Flow of Costs in Process Costing
What is transferred from Work In Process Department B to Finished Goods?
Cost of Goods Manufactured.
p.6
Flow of Costs in Process Costing
What is the first step in recording the flow of materials in a process costing system?
The first step is to record the cost of raw materials as they are issued to production departments.
p.24
Assigning Costs to Units in Process Costing
What two numbers does each department need to calculate in process costing for financial reporting purposes?
The cost of its ending work in process inventory and the cost of its completed units that were transferred to the next stage of the production process.
p.14
Flow of Costs in Process Costing
What is the journal entry to record labor costs in Department A and Department B?
Work in Process - Department A XXXXX, Work in Process - Department B XXXXX, Salaries and Wages Payable XXXXX
p.6
Flow of Costs in Process Costing
How are overhead costs applied to production departments in a process costing system?
Overhead costs are applied using a predetermined overhead rate, which is based on estimated overhead costs and estimated activity levels.
p.55
Weighted-Average vs FIFO Methods
What is the second step in the FIFO method for process costing?
Compute the Cost per Equivalent Unit.
p.20
Flow of Costs in Process Costing
What is the journal entry for transferring costs from Work in Process - Dept. B to Finished Goods?
Debit Finished Goods and credit Work in Process - Department B.
p.27
Differences Between Job-Order and Process Costing
Why are direct labor and manufacturing overhead combined into conversion costs in process costing?
Because direct labor costs are often small in comparison to other product costs in process cost systems.
p.18
Flow of Costs in Process Costing
What is the journal entry for transferring costs from Work in Process - Dept. A to Work in Process - Dept. B?
Debit Work in Process - Department B, Credit Work in Process - Department A.
p.19
Flow of Costs in Process Costing
What indicates the completion of products in Work in Process Department B?
The Cost of Goods Manufactured is transferred to Finished Goods.
p.36
Equivalent Units in Process Costing
How is the equivalent units of production in ending work in process calculated?
By multiplying the number of units in process (900) by the percentage completion (60%)
p.31
Equivalent Units in Process Costing
How many units were left in process and what was their completion percentage?
5,000 units were left in process, 30 percent complete.
p.23
Flow of Costs in Process Costing
How are costs transferred between departments in process costing?
Costs are transferred using T-accounts, where the 'Transferred-Out' costs from one department become the 'Transferred-In' costs for the next department.
p.22
Flow of Costs in Job-Order Costing
When is the cost of units transferred to Cost of Goods Sold?
When a customer’s order is filled and units are sold.
p.45
Weighted-Average vs FIFO Methods
How does the FIFO method differ from the weighted-average method in terms of equivalent units?
The FIFO method removes the equivalent units that were already in beginning inventory from the equivalent units as defined using the weighted-average method.
p.54
Equivalent Units in Process Costing
How do you calculate equivalent units in process costing?
Equivalent units are calculated by dividing the sum of partially completed units by the total number of units, including completed and partially completed units.
p.6
Flow of Costs in Process Costing
What is the role of overhead in a process costing system?
Overhead costs are allocated to production departments based on a predetermined overhead rate.
p.11
Flow of Costs in Process Costing
What is the flow of raw material costs in a T-account form?
Raw material costs flow from the Raw Materials account to the Work in Process accounts of different departments.
p.7
Similarities Between Job-Order and Process Costing
What are the similarities in the flow of costs between job-order and process costing?
Both systems track costs through Work in Process, Finished Goods, and Cost of Goods Sold accounts.
p.47
Weighted-Average vs FIFO Methods
What are the two methods used to compute the cost per equivalent unit?
Weighted-average and FIFO methods.
p.38
Equivalent Units in Process Costing
What is the formula for calculating equivalent units of production?
Units completed and transferred + Equivalent units remaining in work in process.
p.58
Assigning Costs to Units in Process Costing
What is the step involved in assigning costs to units in process costing using the Weighted-Average method?
Step 3: Assign Costs to Units
p.41
Equivalent Units in Process Costing
How do you calculate the equivalent units needed to complete the beginning WIP inventory for materials using the FIFO method?
Multiply the number of units by (100% - percentage already complete). For example, 300 units × (100% - 40%) = 180 units.
p.27
Differences Between Job-Order and Process Costing
What are conversion costs in process costing?
Conversion costs are the combined costs of direct labor and manufacturing overhead.
p.28
Equivalent Units in Process Costing
Why do partially completed units complicate the determination of a department’s output?
Because they affect the calculation of the unit cost that should be assigned to the output.
p.50
Weighted-Average vs FIFO Methods
Is a separate calculation made for each cost category in each processing department when using the Weighted-Average Method?
Yes, a separate calculation is made for each cost category in each processing department.
p.33
Weighted-Average vs FIFO Methods
How does the weighted-average method handle units and costs from different periods?
It blends together units and costs from prior and current periods.
p.26
Weighted-Average vs FIFO Methods
What is a key characteristic of the weighted-average method in process costing?
It makes no distinction between work done in the prior and current periods, blending together units and costs from both periods.
p.12
Flow of Costs in Process Costing
What is the journal entry form for the flow of raw material costs in process costing?
Work in Process - Department A XXXXX, Work in Process - Department B XXXXX, Raw Materials XXXXX
p.48
Cost per Equivalent Unit Calculation
What components are included in the numerator when calculating the cost per equivalent unit using the Weighted-Average Method?
The cost of beginning WIP and the cost added during the period.
p.55
Equivalent Units in Process Costing
How do you calculate the equivalent units to complete beginning work in process inventory in the FIFO method?
Equivalent units to complete beginning work in process inventory = Units in beginning work in process inventory × (100% − Percentage completion of beginning work in process inventory).
p.10
Processing Departments in Process Costing
How many processing departments are assumed in the example?
Two processing departments: Departments A and B.
p.33
Weighted-Average vs FIFO Methods
What does the weighted-average method in process costing do regarding work done in prior and current periods?
It makes no distinction between work done in prior or current periods.
p.19
Flow of Costs in Process Costing
What happens to unfinished products in Work in Process Department B?
They remain in Work in Process until they are completely finished.
p.21
Flow of Costs in Process Costing
What are the components of Work in Process in Department B?
Cost of Goods Manufactured, Direct Materials, Direct Labor, Applied Overhead, Transferred from Dept. A.
p.23
Flow of Costs in Process Costing
What does the term 'Transferred-Out' refer to in process costing?
It refers to the costs associated with units that have been completed in one processing department and moved to the next department or finished goods inventory.
p.21
Flow of Costs in Process Costing
What costs are included in the Cost of Goods Manufactured?
Direct Materials, Direct Labor, Applied Overhead, Transferred from Dept. A.
p.17
Processing Departments in Process Costing
What are the components included in the Work in Process for Department B?
Direct Materials, Direct Labor, Applied Overhead, and Transferred from Dept. A.
p.13
Flow of Costs in Process Costing
What are the components listed under Work in Process for Department A and Department B?
Direct Materials and Direct Labor.
p.13
Flow of Costs in Process Costing
What type of costs are included in the Work in Process accounts for both departments?
Direct Materials and Direct Labor.
p.41
Equivalent Units in Process Costing
How do you calculate the equivalent units needed to complete the beginning WIP inventory for conversion using the FIFO method?
Multiply the number of units by (100% - percentage already complete). For example, 300 units × (100% - 20%) = 240 units.
p.34
Equivalent Units in Process Costing
What is the first step in computing the equivalent units of production?
Compute the equivalent units of production.
p.57
Weighted-Average vs FIFO Methods
What are the two methods used to assign costs to units in process costing?
Weighted-average method and FIFO method.
p.57
Weighted-Average vs FIFO Methods
What is the main difference between the weighted-average and FIFO methods in process costing?
The weighted-average method combines costs from the current and previous periods, while the FIFO method assigns costs based only on the current period's costs.
p.4
Differences Between Job-Order and Process Costing
What type of products is process costing used for?
Similar and produced continuously.
p.29
Equivalent Units in Process Costing
What is the key concept of equivalent units in process costing?
Two half-completed products are equivalent to one complete product.
p.18
Flow of Costs in Process Costing
What happens to units once processing is completed in a department?
The units are transferred to the next department for further processing.
p.5
Processing Departments in Process Costing
What must be true about the output of a processing department?
The output must be homogeneous.
p.33
Equivalent Units in Process Costing
How are equivalent units of production determined in the weighted-average method?
By adding together the number of units transferred out plus the equivalent units in ending Work in Process Inventory.
p.54
Equivalent Units in Process Costing
What is the formula used in the given example to calculate equivalent units?
(29440 + 245400) / (61000 + 1000 + 0.1) = 4.42
p.26
Weighted-Average vs FIFO Methods
How does the weighted-average method differ from the FIFO method in calculating unit costs?
The weighted-average method blends costs from prior and current periods, while FIFO calculates unit costs using only the costs and outputs from the current period.
p.11
Flow of Costs in Process Costing
Which departments are involved in the flow of raw material costs in the given T-account form?
Department A and Department B.
p.13
Flow of Costs in Process Costing
What is the T-account form used for in the flow of labor costs?
To track the flow of labor costs through different departments.
p.16
Flow of Costs in Process Costing
How is manufacturing overhead cost applied in process costing?
According to the amount of the allocation base incurred in the department.
p.55
Equivalent Units in Process Costing
How is the equivalent units of production calculated in the FIFO method?
Equivalent units of production = Equivalent units to complete beginning work in process inventory + Units started and completed during the period + Equivalent units in ending work in process inventory.
p.12
Flow of Costs in Process Costing
What does the journal entry to issue raw materials to Processing Department A and Department B look like?
Work in Process - Department A XXXXX, Work in Process - Department B XXXXX, Raw Materials XXXXX
p.47
Weighted-Average vs FIFO Methods
How does the FIFO method compute the cost per equivalent unit?
It considers only the costs incurred during the current period and divides by the equivalent units of production for the current period.
p.52
Flow of Costs in Process Costing
What are the costs added in Assembly for materials and conversion?
$118,621 for materials and $81,130 for conversion
p.52
Cost per Equivalent Unit Calculation
How is the cost per equivalent unit for conversion calculated?
$85,050 ÷ 5,670 units = $15.00
p.53
Weighted-Average vs FIFO Methods
What costing method does Harker Corporation use in its process costing system?
The weighted-average method.
p.45
Weighted-Average vs FIFO Methods
What does the FIFO method isolate in process costing?
The FIFO method isolates the equivalent units due to work performed during the current period.
p.24
Assigning Costs to Units in Process Costing
What is the key to deriving the cost of ending work in process inventory and the cost of completed units in process costing?
Calculating unit costs within each department.
p.17
Processing Departments in Process Costing
What are the components included in the Work in Process for Department A?
Direct Materials, Direct Labor, and Applied Overhead.
p.48
Cost per Equivalent Unit Calculation
How is the cost per equivalent unit calculated using the Weighted-Average Method?
Cost per equivalent unit = (Cost of beginning WIP + Cost added during the period) / (Units transferred out + Equivalent units in ending WIP)
p.47
Weighted-Average vs FIFO Methods
How does the weighted-average method compute the cost per equivalent unit?
It combines the costs of beginning inventory with the costs incurred during the current period and divides by the equivalent units of production.
p.66
Weighted-Average vs FIFO Methods
How does the FIFO method differ from the weighted-average method in cost reconciliation?
The FIFO method separates costs incurred in the current period from costs in the beginning inventory, assigning costs to units based on the order they were incurred.
p.3
Differences Between Job-Order and Process Costing
How are costs accumulated in process costing?
Costs are accumulated by department.
p.52
Equivalent Units in Process Costing
How many equivalent units are there for materials and conversion?
5,940 for materials and 5,670 for conversion
p.52
Cost per Equivalent Unit Calculation
How is the cost per equivalent unit for materials calculated?
$124,740 ÷ 5,940 units = $21.00
p.65
Equivalent Units in Process Costing
How many equivalent units are needed to complete the beginning WIP inventory?
180 for materials and 240 for conversion
p.65
Cost per Equivalent Unit Calculation
What is the cost per equivalent unit for materials and conversion?
$20.3816 for materials and $14.4617 for conversion
p.65
Assigning Costs to Units in Process Costing
What is the cost of units started and completed for materials and conversion?
$103,946 for materials and $73,755 for conversion
p.57
Weighted-Average vs FIFO Methods
Which method, weighted-average or FIFO, is more likely to smooth out cost fluctuations over time?
The weighted-average method.
p.40
Equivalent Units in Process Costing
What are the equivalent units for the ending work in process?
270 equivalent units (900 units × 30%).
p.8
Flow of Costs in Job-Order Costing
What is manufacturing overhead in a job-order costing system?
Indirect costs associated with manufacturing, such as utilities and depreciation.
p.70
Flow of Costs in Process Costing
How do costs flow in process costing?
Costs flow from one processing department to the next until the product is completed.
p.5
Processing Departments in Process Costing
What is a processing department in an organization?
Any unit where materials, labor, or overhead are added to the product.
p.25
Weighted-Average vs FIFO Methods
How does the weighted-average method of process costing calculate unit costs?
By combining costs and outputs from the current and prior periods.
p.6
Flow of Costs in Process Costing
How are labor costs recorded in a process costing system?
Labor costs are recorded by assigning direct labor costs to the production departments where the work is performed.
p.24
Assigning Costs to Units in Process Costing
What are the three key concepts in process costing computations?
The text does not specify the three key concepts, only that there are three key concepts in process costing computations.
p.14
Flow of Costs in Process Costing
What accounts are debited when recording labor costs in process costing?
Work in Process - Department A and Work in Process - Department B
p.3
Differences Between Job-Order and Process Costing
How are jobs characterized in job-order costing?
Many different jobs are worked on during each period, with each job having unique production requirements.
p.31
Equivalent Units in Process Costing
What is the equivalent units of production for Jones for the period?
11,500 equivalent units (10,000 completed units + (5,000 units in process × 0.3)).
p.66
Weighted-Average vs FIFO Methods
What does the weighted-average method in cost reconciliation involve?
Combining costs from the beginning inventory with costs incurred during the period to calculate an average cost per unit.
p.47
Weighted-Average vs FIFO Methods
Which method includes the costs of beginning inventory in the calculation of cost per equivalent unit?
The weighted-average method.
p.56
Cost per Equivalent Unit Calculation
What were the total costs added in June for materials and conversion?
$118,621 for materials and $81,130 for conversion.
p.65
Assigning Costs to Units in Process Costing
What are the costs in the beginning WIP inventory for materials and conversion?
$6,119 for materials and $3,920 for conversion
p.65
Assigning Costs to Units in Process Costing
What is the cost to complete the beginning WIP inventory for materials and conversion?
$3,669 for materials and $3,471 for conversion
p.56
Cost per Equivalent Unit Calculation
How is the total cost per equivalent unit calculated using the FIFO method?
Total cost per equivalent unit = Cost per equivalent unit for materials + Cost per equivalent unit for conversion.
p.9
Flow of Costs in Process Costing
What is the role of 'Direct Materials' in the flow of costs in a process costing system?
Direct Materials are the raw materials that are directly used in the production process.
p.8
Flow of Costs in Job-Order Costing
What is the purpose of a job-order costing system?
To trace and apply manufacturing costs to jobs.
p.22
Flow of Costs in Job-Order Costing
What is the journal entry for transferring costs from Finished Goods to Cost of Goods Sold?
Debit Cost of Goods Sold and credit Finished Goods.
p.25
Weighted-Average vs FIFO Methods
How does the FIFO method of process costing calculate unit costs?
Based solely on the costs and outputs from the current period.
p.2
Similarities Between Job-Order and Process Costing
What costs do both job-order and process costing systems assign to products?
Material, labor, and overhead costs.
p.2
Similarities Between Job-Order and Process Costing
What mechanism do both job-order and process costing systems provide?
A mechanism for computing unit product costs.
p.31
Equivalent Units in Process Costing
How many units did Jones start and complete in the current period?
Jones started 15,000 units and completed 10,000 units.
p.2
Similarities Between Job-Order and Process Costing
How is the flow of costs through manufacturing accounts in job-order and process costing systems?
The flow of costs is basically the same in both systems.
p.66
Cost Reconciliation Report in Process Costing
What is the purpose of a cost reconciliation report in process costing?
To reconcile the total costs accounted for with the total costs to be accounted for.
p.7
Similarities Between Job-Order and Process Costing
Which costs are included in both job-order and process costing systems?
Direct Materials, Direct Labor, and Manufacturing Overhead.
p.16
Flow of Costs in Process Costing
What does the journal entry for overhead cost applied to Department A and Department B include?
It includes debits to Work in Process - Department A and Work in Process - Department B, and a credit to Manufacturing Overhead.
p.38
Equivalent Units in Process Costing
How are the equivalent units for work in process calculated for conversion?
900 units × 30% = 270 units.
p.32
Weighted-Average vs FIFO Methods
What is the weighted-average method in process costing?
The weighted-average method combines the costs and equivalent units of a period with the costs and equivalent units in beginning inventory to calculate the cost per equivalent unit.
p.32
Weighted-Average vs FIFO Methods
What is the FIFO method in process costing?
The FIFO method calculates the cost per equivalent unit based only on the work done during the current period, excluding the beginning inventory costs.
p.44
Equivalent Units in Process Costing
Using the FIFO method, what are the equivalent units of production for the beginning WIP?
240 equivalent units (300 units × 80%).
p.15
Flow of Costs in Job-Order Costing
What does 'Direct Materials' signify in the Work in Process T-account?
Direct materials are the raw materials that are directly used in the production of goods and are recorded in the Work in Process account.
p.8
Flow of Costs in Job-Order Costing
What happens to costs when finished goods are sold in a job-order costing system?
They are transferred to Cost of Goods Sold.
p.19
Flow of Costs in Process Costing
What are the components included in the Work in Process for Department B?
Direct Materials, Direct Labor, Applied Overhead, Transferred from Dept. A.
p.23
Flow of Costs in Process Costing
What does 'Transferred-In' mean in the context of process costing?
It refers to the costs that are transferred into a processing department from a preceding department.
p.12
Flow of Costs in Process Costing
How are materials drawn from the storeroom in process costing?
Using a materials requisition form.
p.17
Processing Departments in Process Costing
What might happen to some products during the production process in Department B?
Some products may still remain unfinished and continue the production process.
p.30
Equivalent Units in Process Costing
How do you calculate the equivalent units for partially complete units in process costing?
Multiply the number of partially complete units by the percentage of completion (e.g., 500 units × 60% = 300 equivalent units).
p.55
Weighted-Average vs FIFO Methods
In the FIFO method, is a separate calculation made for each cost category in each processing department?
Yes, a separate calculation is made for each cost category in each processing department.
p.38
Equivalent Units in Process Costing
How are the equivalent units for work in process calculated for materials?
900 units × 60% = 540 units.
p.57
Cost per Equivalent Unit Calculation
How does the weighted-average method calculate cost per equivalent unit?
By dividing the total costs (including beginning inventory and current period costs) by the total equivalent units.
p.61
Weighted-Average vs FIFO Methods
What costing method does Sunspot Beverages use in its process costing system?
The weighted-average method.
p.15
Flow of Costs in Job-Order Costing
What are the typical entries under 'Work in Process' in a T-account?
Typical entries under 'Work in Process' include direct labor, direct materials, and applied overhead.
p.28
Equivalent Units in Process Costing
What is the formula for calculating equivalent units in process costing?
Equivalent Units = # of partially completed units × Percentage completion
p.25
Weighted-Average vs FIFO Methods
What are the two methods for performing process costing computations?
The weighted-average method and the FIFO method.
p.5
Processing Departments in Process Costing
How do products typically flow in a process costing environment?
Products flow in a sequence from one department to another.
p.45
Weighted-Average vs FIFO Methods
What is the main focus of the FIFO method in process costing?
The main focus of the FIFO method is to account for the equivalent units of work performed during the current period only.
p.2
Similarities Between Job-Order and Process Costing
Which manufacturing accounts are used by both job-order and process costing systems?
Manufacturing Overhead, Raw Materials, Work in Process, and Finished Goods.
p.26
Equivalent Units in Process Costing
How are the equivalent units of production calculated in the weighted-average method?
They are the number of units transferred to the next department (or finished goods) plus the equivalent units in the department’s ending work in process inventory.
p.3
Differences Between Job-Order and Process Costing
How are unit costs computed in job-order costing?
Unit costs are computed by job on the job cost sheet.
p.3
Differences Between Job-Order and Process Costing
What type of product is produced in process costing?
A single product is produced either on a continuous basis or for long periods of time. All units of product are identical.
p.43
Equivalent Units in Process Costing
What is the formula to compute equivalent units of production using the FIFO method?
Equivalent units of production = Units completed + Equivalent units in ending WIP - Equivalent units in beginning WIP.
p.43
Equivalent Units in Process Costing
How many equivalent units were there for the beginning Work in Process?
180 equivalent units (300 units × 60%).
p.32
Equivalent Units in Process Costing
How do you compute equivalent units of production using the FIFO method?
To compute equivalent units using the FIFO method, add the work needed to complete the beginning inventory, the units started and completed during the period, and the equivalent units in ending work in process inventory.
p.42
Equivalent Units in Process Costing
How do you compute the equivalent units of production for conversion costs using the FIFO method for beginning WIP inventory?
Multiply the units in beginning WIP inventory by the percentage of conversion needed to complete them. For example, 300 units × (100% - 20%) = 240 equivalent units.
p.9
Flow of Costs in Process Costing
What are 'Transferred-in Costs' in a process costing system?
Transferred-in Costs are costs that are transferred from one processing department to another as the product moves through the production process.
p.42
Equivalent Units in Process Costing
How do you compute the equivalent units of production for conversion costs in ending WIP inventory using the FIFO method?
Multiply the units in ending WIP inventory by the percentage of completion for conversion. For example, 900 units × 30% complete = 270 equivalent units.
p.70
Cost per Equivalent Unit Calculation
How is cost per equivalent unit calculated?
Cost per equivalent unit is calculated by dividing the total costs by the equivalent units of production.
p.5
Processing Departments in Process Costing
How are activities performed in a processing department?
Activities are performed uniformly on all units of production.
p.35
Equivalent Units in Process Costing
What is the first step in computing the Equivalent Units of Production?
Calculate the equivalent units completed and transferred out of the department.
p.21
Flow of Costs in Job-Order Costing
What is transferred from Finished Goods Inventory to Cost of Goods Sold?
Transfers from Finished Goods Inventory to Cost of Goods Sold.
p.21
Flow of Costs in Job-Order Costing
What does the T-account for Finished Goods include?
Transfers from Finished Goods Inventory to Cost of Goods Sold.
p.17
Flow of Costs in Process Costing
What happens to the costs when they are transferred from Department A to Department B?
The transferred-in costs from Department A are added to the manufacturing costs incurred in Department B.
p.7
Similarities Between Job-Order and Process Costing
What are the three main cost accounts used in both job-order and process costing?
Work in Process, Finished Goods, and Cost of Goods Sold.
p.13
Flow of Costs in Process Costing
Which departments are involved in the flow of labor costs in the given T-account form?
Department A and Department B.
p.3
Differences Between Job-Order and Process Costing
How are costs accumulated in job-order costing?
Costs are accumulated by individual job.
p.41
Weighted-Average vs FIFO Methods
What is the first step in the FIFO method for computing the equivalent units of production?
Compute the equivalent units of production.
p.56
Cost per Equivalent Unit Calculation
What is the formula for calculating the cost per equivalent unit using the FIFO method?
Cost per equivalent unit = Cost added in the period / Equivalent units.
p.52
Cost per Equivalent Unit Calculation
What is the total cost per equivalent unit?
$21.00 (materials) + $15.00 (conversion) = $36.00
p.44
Equivalent Units in Process Costing
Using the FIFO method, what are the equivalent units of production for the ending WIP?
270 equivalent units (900 units × 30%).
p.9
Flow of Costs in Process Costing
What does 'Direct Labor' refer to in a process costing system?
Direct Labor refers to the wages of workers who are directly involved in the production process.
p.61
Equivalent Units in Process Costing
What percentage of completion for materials and conversion was the beginning work in process in the Blending Department?
70% for materials and 40% for conversion.
p.8
Flow of Costs in Job-Order Costing
What happens to costs once a job is completed in a job-order costing system?
They are transferred to Finished Goods.
p.70
Weighted-Average vs FIFO Methods
What is the FIFO method in process costing?
The FIFO method calculates cost per equivalent unit based only on the costs and work done during the current period.
p.16
Flow of Costs in Process Costing
What is the journal entry form for recording the flow of manufacturing overhead costs in process costing?
Work in Process - Department A XXXXX, Work in Process - Department B XXXXX, Manufacturing Overhead XXXXX
p.31
Equivalent Units in Process Costing
How do you calculate the equivalent units of production for the period?
Equivalent units = Completed units + (Units in process × Completion percentage).
p.12
Flow of Costs in Process Costing
Can materials be added in any processing department in process costing?
Yes, materials can be added in any processing department.
p.7
Similarities Between Job-Order and Process Costing
How are Direct Materials costs treated in both job-order and process costing?
Direct Materials costs are added to the Work in Process account.
p.48
Equivalent Units in Process Costing
What does 'Equivalent Unit of Production' refer to in process costing?
It refers to the sum of units transferred out and equivalent units in ending WIP.
p.39
Equivalent Units in Process Costing
How are the equivalent units for materials calculated for the ending Work in Process?
900 units × 60% = 540 equivalent units.
p.61
Cost per Equivalent Unit Calculation
What are the cost per equivalent unit for materials and conversion in the Blending Department for June?
$0.87 for materials and $0.67 for conversion.
p.9
Flow of Costs in Process Costing
What happens to costs when goods are completed in a process costing system?
When goods are completed, their costs are transferred from the Work in Process account to the Finished Goods account.
p.70
Processing Departments in Process Costing
What are processing departments in process costing?
Processing departments are units where work is performed on products and where materials, labor, and overhead costs are added.
p.66
Cost Reconciliation Report in Process Costing
Which methods can be used to prepare a cost reconciliation report?
The weighted-average method and the FIFO method.
p.48
Cost per Equivalent Unit Calculation
What components are included in the denominator when calculating the cost per equivalent unit using the Weighted-Average Method?
Units transferred out and equivalent units in ending WIP.
p.13
Flow of Costs in Process Costing
What account is credited when recording labor costs in the T-account form?
Salaries and Wages Payable.
p.3
Differences Between Job-Order and Process Costing
How are unit costs computed in process costing?
Unit costs are computed by department.
p.9
Flow of Costs in Process Costing
What are the main components of the flow of costs in a process costing system?
Direct Materials, Direct Labor, Manufacturing Overhead, Processing Department Work in Process, Transferred-in Costs, Finished Goods, Cost of Goods Sold.
p.42
Equivalent Units in Process Costing
How do you compute the equivalent units of production for materials using the FIFO method for beginning WIP inventory?
Multiply the units in beginning WIP inventory by the percentage of materials needed to complete them. For example, 300 units × (100% - 40%) = 180 equivalent units.
p.42
Equivalent Units in Process Costing
How do you compute the equivalent units of production for materials in ending WIP inventory using the FIFO method?
Multiply the units in ending WIP inventory by the percentage of completion for materials. For example, 900 units × 60% complete = 540 equivalent units.
p.8
Flow of Costs in Job-Order Costing
What are the main components of manufacturing costs in a job-order costing system?
Direct materials, direct labor, and manufacturing overhead.
p.70
Differences Between Job-Order and Process Costing
What is process costing?
Process costing is a costing method used where similar items are produced in a continuous process.
p.23
Flow of Costs in Process Costing
What is the role of T-accounts in process costing?
T-accounts are used to track the flow of costs between departments, showing 'Transferred-Out' costs from one department and 'Transferred-In' costs to the next.
p.7
Similarities Between Job-Order and Process Costing
How are Direct Labor costs treated in both job-order and process costing?
Direct Labor costs are added to the Work in Process account.
p.66
Cost Reconciliation Report in Process Costing
What are the key components of a cost reconciliation report?
Total costs to be accounted for, total costs accounted for, and the reconciliation of these costs.
p.56
Equivalent Units in Process Costing
How many equivalent units were there for materials and conversion in June?
5,820 for materials and 5,610 for conversion.
p.57
Cost per Equivalent Unit Calculation
How does the FIFO method calculate cost per equivalent unit?
By dividing the current period costs by the equivalent units of production for the current period only.
p.70
Differences Between Job-Order and Process Costing
How does process costing differ from job-order costing?
Process costing accumulates costs by department for a period, while job-order costing accumulates costs by individual jobs.
p.9
Flow of Costs in Process Costing
What is meant by 'Processing Department Work in Process' in a process costing system?
Processing Department Work in Process refers to the costs associated with partially completed goods in each processing department.
p.15
Flow of Costs in Job-Order Costing
What does 'applied overhead' refer to in the context of manufacturing overhead?
Applied overhead refers to the estimated overhead costs assigned to work in process during production.
p.9
Flow of Costs in Process Costing
What is the final step in the flow of costs in a process costing system?
The final step is transferring the costs from the Finished Goods account to the Cost of Goods Sold account when the goods are sold.
p.40
Equivalent Units in Process Costing
What is the first step in computing the equivalent units of production?
Compute the equivalent units of production.
p.32
Equivalent Units in Process Costing
What are equivalent units of production?
Equivalent units of production are the number of units that could have been completed given the amount of work done during a period.
p.43
Equivalent Units in Process Costing
How many equivalent units were there for the ending Work in Process?
540 equivalent units (900 units × 60%).
p.32
Equivalent Units in Process Costing
How do you compute equivalent units of production using the weighted-average method?
To compute equivalent units using the weighted-average method, add the units completed and transferred out to the equivalent units in ending work in process inventory.
p.15
Flow of Costs in Job-Order Costing
What is the purpose of a T-account in accounting?
A T-account is used to visualize the flow of transactions in a ledger, showing debits on the left side and credits on the right side.
p.15
Flow of Costs in Job-Order Costing
How are overhead costs applied to Work in Process in Department A and Department B?
Overhead costs are applied to Work in Process in Department A and Department B through the 'Applied Overhead' entries in their respective T-accounts.
p.70
Cost Reconciliation Report in Process Costing
What is a cost reconciliation report in process costing?
A cost reconciliation report accounts for the total costs to be accounted for and the total costs accounted for, ensuring they match.
p.64
Weighted-Average vs FIFO Methods
How do you compute the cost of ending Work in Process Inventory using FIFO?
540 equivalent units for materials × $20.3816 + 270 equivalent units for conversion × $14.4617
p.61
Processing Departments in Process Costing
What are the two stages in Sunspot Beverages' production process?
Fruit juices are extracted from fresh fruits and then blended in the Blending Department, followed by the Bottling Department.
p.15
Flow of Costs in Job-Order Costing
How is 'actual overhead' different from 'applied overhead'?
Actual overhead refers to the real overhead costs incurred, while applied overhead is the estimated overhead assigned to work in process.
p.53
Cost per Equivalent Unit Calculation
How is the cost per equivalent unit for conversion costs calculated?
By dividing the total conversion costs by the equivalent units of production.
p.70
Assigning Costs to Units in Process Costing
How are costs assigned to units in process costing?
Costs are assigned to units by multiplying the number of equivalent units by the cost per equivalent unit.
p.9
Flow of Costs in Process Costing
What is 'Manufacturing Overhead' in the context of process costing?
Manufacturing Overhead includes all indirect costs associated with production, such as utilities, maintenance, and factory supplies.
p.15
Flow of Costs in Job-Order Costing
What are the components of manufacturing overhead in a T-account?
Manufacturing overhead includes applied overhead, direct labor, direct materials, and actual overhead.
p.15
Flow of Costs in Job-Order Costing
What is the role of 'Direct Labor' in the Work in Process T-account?
Direct labor represents the labor costs directly associated with the production of goods in the Work in Process account.
p.61
Equivalent Units in Process Costing
What percentage of completion for materials and conversion was the ending work in process in the Blending Department?
75% for materials and 25% for conversion.
p.70
Weighted-Average vs FIFO Methods
What is the weighted-average method in process costing?
The weighted-average method combines costs and equivalent units of a period with those in beginning inventory to calculate a cost per equivalent unit.
p.70
Equivalent Units in Process Costing
What are equivalent units in process costing?
Equivalent units are the number of complete units that could have been obtained from the materials and effort that went into partially complete units.
