Cost and Mangerial Accounting Unit 3: Module 6

In process costing, the units completed and the units remaining in ending work-in-process inventory at the end of the period come from which of the following?

The units in beginning inventory and the units started during the current period

Which of the following are transferred from work-in-process to finished goods inventory?

Actual inventory items and the costs of those inventory items

Which costs make up the work-in-process inventory costs in the processing centers?

Direct materials and coversion costs

Which term is used for direct materials and conversion costs associated with items started but not finished?

Work-in-process inventory

Which statement accurately describes the equivalent number of units?

The equivalent number of units is not the same as the number of physical units transferred to finished goods.

The costs that are associated with units completed and transferred out this period are the sum of which components?

the cost of beginning work-in-process inventory, both materials and conversion costs; the cost per equivalent unit required to complete those units in beginning inventory; and the cost per equivalent unit of the items started and completed this period, both materials and conversion costs

The cost of goods transferred out to finished goods is the sum of the costs to make the finished goods in all processes, both in the current or prior period.

At Kretsmart, which of the following is incurred in beginning inventory?

Direct materials were used in production before all the conversion costs.

Correct! The direct materials costs were 100% incurred in beginning inventory, but conversion costs were only 80% incurred.

At Kretsmart, in the current period, the total cost per unit was $1.66. Which costs are used to calculate per unit price?

Only the direct materials costs and conversion costs of the current period

According to Kretsmart's schedules above, the total dollars spent on work transferred out and ending inventory totalled $163,680.

Which calculation accurately describes how to convert costs for work transferred out and ending inventory?

$159,360 of goods transferred out and $4,320 of ending work-in-process inventory

Correct! To get the $164,680 you need to add the ending work-in-process inventory to the goods that were transferred to finished goods.

Which of the following statements summarizes how the cost of the ending work-in-process inventory should be calculated?

The sum of the material costs plus the conversion costs for the unfinished units

Which of the following statements calculates the material's costs in the ending work-in-process inventory at the end of the current period?

The materials cost per equivalent unit during the current period multiplied by the material's equivalent units in the ending work-in-process inventory

Which statement determines the conversion costs in the ending work-in-process inventory at the end of a current period?

The conversion cost per equivalent unit during the current period multiplied by the conversion equivalent units in the ending work-in-process inventory

The conversion cost of ending work-in-process inventory is equal to which of the following?

The conversion cost per equivalent unit this period multiplied by the conversion cost number of equivalent units

The costs of ending work-in-process inventory is calculated by which of the following formulas?

Cost per unit of direct materials times equivalent units for materials plus conversion costs per unit times the number of equivalent units for conversion costs

Jaunty Coffee Company has 1,000 units in beginning work-in-process inventory that are 100% complete with respect to direct materials. A total of 5,000 units were started during the period. A total of 2,000 units were in the ending work-in-process inventory.

What are the equivalent units for direct materials in the beginning work-in-process inventory for the current period?

0

Correct! If all the direct materials were added in the prior period (which they were for the beginning work-in-process inventory), there are no equivalent units for direct materials this period for the beginning work-in-process inventory.

Jaunty Coffee Company has 1,000 units in beginning work-in-process inventory that are 100% complete with respect to direct materials. A total of 5,000 units were started during the period. A total of 2,000 units were in the ending work-in-process inventory.

Using the data for Jaunty Coffee Company, which statement is true regarding costs per unit and ending work-in-process inventory?

The costs per unit of both direct materials and conversion costs are different for the beginning work-in-process inventory and costs incurred during the current period.

Correct! The calculations for both direct materials costs and conversion costs are made separately for beginning work-in-process inventory and the current period and are usually different from each other. In Jaunty Coffee Company's case, both beginning inventory and ending inventory are 100% complete, while conversion costs are 40% and 30% respectively.

What is the number of equivalent units for direct materials equal to?

The equivalent units for beginning work-in-process inventory plus the equivalent units for units started and completed plus the equivalent units for ending work-in-process inventory

What is included in the cost of units completed and transferred to finished goods for this company?

Beginning inventory cost carried forward from the previous period, the cost per equivalent unit required to complete units in beginning inventory, and the cost per equivalent unit of items started and completed this period

Which costs would be introduced into a process costing activity center first?

Direct materials costs

What is another name for the "work done" or "work performed" during a period under process costing?

Equivalent units of production

The beginning inventory for a company is 100 units at 30% complete. A total of 5,000 units were started and completed during the period. Ending inventory is 400 units at 60% complete.

How much is the company's equivalent units for the period?

5,310 units

When determining the cost per unit of units produced in a processing center, which statement is true?

Separate costs are calculated per unit for direct materials and conversion costs for both beginning work-in-process inventory and current period costs.

What is the name of the cost associated with the completed units?

Cost of goods manufactured

What are the total processing dollars spent during a period in a process center equal to?

The sum of the cost of goods transferred out and the cost of ending work-in-process inventory

Assume there are 3,000 units in ending work-in-process inventory, the unit cost for direct materials is $2.00, and the unit cost for conversion costs is $3.00. If the ending inventory is 100% complete as to direct materials and 60% complete as to conversion costs, what is the cost of ending work-in-process inventor?

6,000 for direct materials and $5,400 for conversion costs for a total of $11,400

Which of the following are always considered 100% complete when calculating equivalent units?

Units started and completed during the period.

When computing the costs transferred out of a department or processing center, which of the following is true?

The costs to complete direct materials in beginning work-in-process inventory are added to the costs to complete conversion of the beginning work-in-process, and the total is added to the total costs of the started and completed inventory for the period.