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
identities as individual items. In such industries, it is neither practical nor necessary to
identify output by jobs.
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 20
PROCESS COST SYSTEMS
DISCUSSION QUESTIONS
CHAPTER 20 Process Cost Systems
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,
CHAPTER 20 Process Cost Systems
PE 20–1A
Shipbuilding Job order
PE 20–1B
Steel manufacturing Process
PE 20–2A
PE 20–2B
PRACTICE EXERCISES
CHAPTER 20 Process Cost Systems
PE 20–3A
Percent
Total Materials Equivalent
Whole Added In Units for
Units Period Materials
Inventory in process, beginning of period……………
…
3,000 0% 0
PE 20–3B
Percent
Total Materials Equivalent
Whole Added In Units for
Units Period Materials
…
…
…
CHAPTER 20 Process Cost Systems
PE 20–4A
Percent
Total Conversion Equivalent
Whole Completed Units for
Units in Period Conversion
Inventory in process, beginning of period……………
…
3,000 40% 1,200
PE 20–4B
Percent
Total Conversion Equivalent
Whole Completed Units for
Units in Period Conversion
…
…
PE 20–5A
PE 20–5B
…
CHAPTER 20 Process Cost Systems
PE 20–6A
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 20–6B
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 20–7A
a. Work in Process—Filling 13,300
Work in Process—Blending 5,000
PE 20–7B
a. Work in Process—Rolling 510,000
Work in Process—Casting 510,000
CHAPTER 20 Process Cost Systems
PE 20–8A
$14,875
PE 20–8B
$76,000
CHAPTER 20 Process Cost Systems
Ex. 20–1
a. Work in Process—Blending Department XXX
CHAPTER 20 Process Cost Systems
Ex. 20–2
Materials
Factory Overhead—
Smelting Dept. Smelting Dept.
Work in Process—
CHAPTER 20 Process Cost Systems
Ex. 20–3
a. 1. Work in Process—Refining Department 335,000
Materials 335,000
2. Work in Process—Refining Department 127,000
Ex. 20–4
Ex. 20–5
Whole Direct
Units Materials Conversion
Inventory in process, beginning
(75% completed) 840 0 210
Equivalent Units
1
CHAPTER 20 Process Cost Systems
Ex. 20–6
a. Drawing Department
Whole Direct
Units Materials Conversion
Inventory in process, September 1
(40% completed) 7,000 0 4,200
b. Winding Department
Whole Direct
Units Materials Conversion
Inventory in process, September 1
(80% completed) 3,200 0 640
Equivalent Units
Equivalent Units
1
1
CHAPTER 20 Process Cost Systems
Ex. 20–7
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
CHAPTER 20 Process Cost Systems
Ex. 20–8
3. $18,496, determined as follows:
Work in Process—Baking Department balance, July 1…………………
…
$16,576
Conversion costs incurred during July
…
5. $26,964, determined as follows:
Direct materials ($1.90 × 12,600 units)……………………………………… $23,940
…
b. The conversion costs in July decreased by $0.03 per equivalent unit,
determined as follows:
CHAPTER 20 Process Cost Systems
Ex. 20–9
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
the material during the current period. The reason is because the costs for the
The inventory in process on March 31 includes the remaining pounds of cereal in
the hopper and boxes in the carousel that are properly included in the equivalent
unit computation for March (since the costs were incurred in the department in
…
CHAPTER 20 Process Cost Systems
Ex. 20–10
b. Equivalent units of production for conversion costs:
Beginning inventory……………………………………………………………
…
0
Conversion cost per equivalent unit:
c. Equivalent units of production for direct materials costs:
Beginning inventory……………………………………………………………
…
0
CHAPTER 20 Process Cost Systems
Ex. 20–11
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
*
…
CHAPTER 20 Process Cost Systems
Ex. 20–12
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:
Beginning work in process…………………………………………………………
…
$22,450
Deduct direct materials cost incurred in prior period
…
…
CHAPTER 20 Process Cost Systems
Ex. 20–13
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:
CHAPTER 20 Process Cost Systems
Ex. 20–14
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
1
*