1. a. An assembly-type industry using mass production methods, such as TV assembly, would
use the process cost system because the products are somewhat standard and lose their
2. Since all goods produced in a process cost system are identical units, it is not necessary to
3. In a process cost system, the direct labor and factory overhead applied are debited to the
work in process accounts of the individual production departments in which they occur. The
4. The cost per equivalent unit is frequently determined separately for direct materials and
5. The cost per equivalent unit is used to allocate direct materials and conversion costs between
completed and partially completed units.
7. The most important purpose of the cost of production report is to assist in the control of
8. Cost of production reports can provide detailed data about the process. The reports can
CHAPTER 18 (FINMAN); CHAPTER 3 (MAN)
PROCESS COST SYSTEMS
DISCUSSION QUESTIONS
DISCUSSION QUESTIONS (Continued)
9. Yield is a measure of the materials usage efficiency of a process manufacturer. It is
10. Just-in-time processing emphasizes combining process functions into manufacturing cells,
PE 18–1A (FINMAN); PE 3–1A (MAN)
Shipbuilding Job order
Gasoline refining Process
PE 18–1B (FINMAN); PE 3–1B (MAN)
Steel manufacturing Process
Business consulting Job order
PE 18–2A (FINMAN); PE 3–2A (MAN)
PE 18–2B (FINMAN); PE 3–2B (MAN)
PRACTICE EXERCISES
PE 18–3A (FINMAN); PE 3–3A (MAN)
Percent
Total Materials Equivalent
Whole Added In Units for
Units Period Materials
PE 18–3B (FINMAN); PE 3–3B (MAN)
Percent
Total Materials Equivalent
Whole Added In Units for
Units Period Materials
PE 18–4A (FINMAN); PE 3–4A (MAN)
Percent
Total Conversion Equivalent
Whole Completed Units for
Units in Period Conversion
PE 18–4B (FINMAN); PE 3–4B (MAN)
Percent
Total Conversion Equivalent
Whole Completed Units for
Units in Period Conversion
PE 18–5A (FINMAN); PE 3–5A (MAN)
$13,300
PE 18–5B (FINMAN); PE 3–5B (MAN)
$510,000
PE 18–6A (FINMAN); PE 3–6A (MAN)
Direct
Materials Conversion Total
Costs Costs Costs
Inventory in process, balance…………………………
$ 1,200
Inventory in process, beginning of period…………
0 + 1,200 × $0.08 96
PE 18–6B (FINMAN); PE 3–6B (MAN)
Direct
Materials Conversion Total
Costs Costs Costs
Inventory in process, balance…………………………
$ 25,000
Inventory in process, beginning of period…………
0 + 320 × $10 3,200
…
…
…
PE 18–7A (FINMAN); PE 3–7A (MAN)
a. Work in Process—Filling 13,300
Work in Process—Blending 5,000
PE 18–7B (FINMAN); PE 3–7B (MAN)
a. Work in Process—Rolling 510,000
Work in Process—Casting 510,000
PE 18–8A (FINMAN); PE 3–8A (MAN)
$14,875
42,500
PE 18–8B (FINMAN); PE 3–8B (MAN)
$76,000
800
Material cost per ton, September: = $95
Energy cost per pound, June: = $0.35
Ex. 18–1 (FINMAN); Ex. 3–1 (MAN)
a. Work in Process—Blending Department XXX
Materials—Cocoa XXX
Ex. 18–2 (FINMAN); Ex. 3–2 (MAN)
Materials
Factory Overhead—
Smelting Dept. Smelting Dept.
Work in Process—
Ex. 18–3 (FINMAN); Ex. 3–3 (MAN)
a. 1. Work in Process—Refining Department 335,000
Materials 335,000
Ex. 18–4 (FINMAN); Ex. 3–4 (MAN)
a. Factory overhead rate:
Ex. 18–5 (FINMAN); Ex. 3–5 (MAN)
Whole Direct
Units Materials Conversion
Inventory in process, beginning
(75% completed) 840 0 210
Equivalent Units
1
Ex. 18–6 (FINMAN); Ex. 3–6 (MAN)
a. Drawing Department
Whole Direct
Units Materials Conversion
Inventory in process, September 1
b. Winding Department
Whole Direct
Units Materials Conversion
Inventory in process, September 1
(80% completed) 3,200 0 640
Equivalent Units
Equivalent Units
1
Ex. 18–7 (FINMAN); Ex. 3–7 (MAN)
a. Units in process, July 1…………………………………………………………
…
8,000
b.
Whole Direct
Units Materials Conversion
Inventory in process, July 1
(2/5 completed) 8,000 0 4,800
Equivalent Units
1
Ex. 18–8 (FINMAN); Ex. 3–8 (MAN)
a. 1. $1.90 ($307,800 ÷ 162,000 units)
4. $343,620 [($1.90 + $0.40) × 149,400 units]
5. $26,964, determined as follows:
b. The conversion costs in July decreased by $0.03 per equivalent unit,
determined as follows:
Ex. 18–9 (FINMAN); Ex. 3–9 (MAN)
Equivalent units of production:
Conversion
Cereal Boxes Cost
(in pounds) (in boxes) (in boxes)
Inventory in process, March 1……………
…
0 0 600
Supporting explanation:
The whole unit inventory in process on March 1 includes both the cereal in the
hopper and the boxes in the carousel, and thus includes no equivalent units for
Note to Instructors: An actual cereal-filling line begins with the empty box
carousel. The box carousel holds flattened boxes that are fed into a high-speed
…
Ex. 18–10 (FINMAN); Ex. 3–10 (MAN)
a. Direct labor…………………………………………………………………………
…
$36,705
b. Equivalent units of production for conversion costs:
…
Conversion cost per equivalent unit:
c. Equivalent units of production for direct materials costs:
Beginning inventory……………………………………………………………
…
0
Ex. 18–11 (FINMAN); Ex. 3–11 (MAN)
a. Units in process at beginning of period………………………………………
…
900
b.
Whole Direct
Units Materials Conversion
Inventory in process, beginning
c.
Direct
Materials Conversion
Total costs for period in Assembly Department $336,000 $194,796
Equivalent Units
Costs
1
*
…
Ex. 18–12 (FINMAN); Ex. 3–12 (MAN)
a. 1. $29,470; determined as follows:
2. Cost of beginning work in process…………………………………………
…
$ 29,470
3. $16,896; determined as follows:
Direct materials ($21.00 × 640 units)………………………………………… $ 13,440
b. Yes. The production costs per unit increased during the current period. The
c. The conversion cost in the current period increased by $0.73 per equivalent
unit, determined as follows:
…
Ex. 18–13 (FINMAN); Ex. 3–13 (MAN)
1. In computing the equivalent units for conversion costs applicable to the June 1
2. In computing the equivalent units for conversion costs for units started and
completed in June, the June 1 inventory of 6,400 units, rather than the June 30
3. The correct equivalent units for conversion costs should be 53,400, determined
as follows:
To process units in inventory on June 1:
Ex. 18–14 (FINMAN); Ex. 3–14 (MAN)
a. 8,600 units (1,200 + 8,300 – 900)
b.
Whole Direct
Units Materials Conversion
Inventory in process, November 1
Direct
Materials Conversion
Total costs for November in Forging Department $124,500 $39,146
Equivalent Units
Costs
*