Accounting 202 Chapter 5 Quiz! Test

The costing system used by a company making computer chips would be process costing. This is because the production of computer chips involves a continuous and standardized manufacturing process, where a large number of identical units are produced. Process costing is suitable for industries that have homogeneous products and a continuous flow of production, such as computer chip manufacturing. Job costing, on the other hand, is used for industries that produce unique, customized products or services. Equivalent units costing and conversion cost costing are not commonly used costing systems in the context of computer chip manufacturing.

The cost of units completed in department one is transferred to WIP in department two because the work in progress (WIP) represents the partially completed units that have been transferred from one department to another. This transfer of costs allows for accurate tracking of the costs associated with each department's production activities. By transferring the costs to WIP in department two, the system ensures that the costs are properly allocated and accounted for in the subsequent department's operations.

The costing system used by a company producing custom window treatments would be job costing. This is because job costing is used when each unit produced is unique and requires different amounts of resources and time. In the case of custom window treatments, each order would be treated as a separate job, with specific materials and labor costs attributed to it. This allows for accurate tracking of costs and pricing for each individual job, ensuring that the company can properly allocate resources and determine the profitability of each order.

In a process costing system, manufacturing costs are typically classified into two categories: direct materials and conversion costs. Direct materials refer to the cost of the materials that are directly used in the production process, such as raw materials or components. Conversion costs, on the other hand, include the cost of labor and manufacturing overhead required to convert the direct materials into finished products. Therefore, the correct answer is direct materials and conversion costs.

Process costing is a system for assigning costs to products that are made in a continuous process, such as in a manufacturing plant. This method is used when products go through multiple stages of production and it is difficult to track the exact cost of each individual product. Instead, the total costs incurred during the production process are divided by the number of units produced to determine the cost per unit. This allows for a more accurate allocation of costs and helps in determining the overall profitability of the production process.

When actual manufacturing overhead costs are incurred in a process department, they are recorded by debiting the manufacturing overhead account. This is because manufacturing overhead represents indirect costs that cannot be directly traced to a specific product or job. By debiting the manufacturing overhead account, the company is increasing the balance of this account to reflect the actual costs incurred. This entry does not involve the WIP (Work in Progress) inventory account, so there is no need for a debit or credit to this account.

The cost of the ping pong balls should be transferred to the WIP inventory─finishing account because the balls are completely finished at this stage of the production process. This means that all the necessary work and materials have been added to the balls to make them ready for sale. The WIP inventory─finishing account represents the cost of the balls that are in the finishing stage of production and have not yet been transferred to the finished goods inventory.

If all direct materials are added at the end of the production process and the units have made it 50% of the way through the production process, it means that no direct materials have been added yet. Therefore, the percentage completion for direct materials is 0%.

If all direct materials are added at the beginning of the production process and the units have made it 50% of the way through the production process, it means that all the direct materials have been used up in the production process. Therefore, the percentage completion for direct materials is 100%.

The entry to record the use of direct materials in production would include a debit to WIP inventory. This is because the direct materials used in production are considered as part of the work in progress (WIP) inventory, which represents the cost of partially completed goods. By debiting the WIP inventory, it reflects the increase in the cost of materials used in the production process.

The cost per equivalent unit is calculated by dividing the total costs to account for by the total equivalent units. This calculation helps in determining the cost of each unit produced or in process. By dividing the total costs by the total equivalent units, we can allocate the costs evenly across all units, taking into account the units that are completed and those that are still in progress. This calculation is important for accurately determining the cost of production and for making informed decisions about pricing and profitability.

The ending inventory equivalent for materials can be calculated by multiplying the number of units remaining in ending WIP (3,000) by the percentage of completion (40%). This gives us 1,200 units. Since the question asks for the ending inventory equivalent, we subtract the completed and transferred out units (12,000) from the calculated units (1,200). Therefore, the ending inventory equivalent for materials is 1,520 units.

The item that would appear first on a production cost report is the Beginning WIP, if any. This is because the production cost report starts by accounting for the work in progress from the previous period, if there is any. It is important to include the beginning WIP in order to accurately track and calculate the total costs and progress of production.

If conversion costs are added evenly throughout the production process, and the units have made it 50% of the way through the production process, then the percentage completion for conversion costs would also be 50%. This is because if the costs are added evenly, then at the halfway point of the production process, half of the conversion costs would have been incurred. Therefore, the correct answer is 50%.

The equivalent units for conversion costs are 3,200. This is because the question states that the paint is 80% through the process, meaning that 80% of the paint has already incurred conversion costs. Since all conversion costs are added evenly throughout the process, the equivalent units for conversion costs would be 80% of the total paint inventory, which is 4,000 gallons. 80% of 4,000 is 3,200.

The total costs accounted for would appear last on a production cost report because it represents the sum of all costs incurred throughout the production process. This includes the cost of goods finished for the month, the beginning work-in-progress (WIP) inventory, if any, and the ending WIP inventory, if any. The total costs accounted for is calculated by adding up all these costs, making it the final figure on the report.

Direct labor and manufacturing overhead are typically incurred evenly throughout the process in a process system. This means that these costs are spread out and allocated evenly over the entire production process, rather than being concentrated at the beginning or end. This method allows for a more accurate reflection of the actual costs incurred during each stage of production and helps in determining the total cost of the final product.

Equivalent units is the correct answer because it refers to a measure of the amount of work done, expressed in complete units of output. It is commonly used in process costing to determine the total number of units that could have been completed given the amount of work done on partially completed units. Equivalent units take into account the percentage of completion of each unit and provide a more accurate measure of the work done compared to simply counting the number of units.

In a process costing system, the number of WIP inventories equals the number of production departments. This means that each production department will have its own work in progress inventory. This is because in a process costing system, the production process is divided into different departments or stages, and each department maintains its own inventory of partially completed products. This helps in tracking the progress and costs associated with each department separately. Therefore, the number of WIP inventories will be equal to the number of production departments.

Process costing is the product costing system normally used to assign costs to goods that are mass-produced. This system is suitable for industries where products are produced in a continuous flow and have similar characteristics. In process costing, costs are accumulated by department or process, and then allocated to the units produced based on the average cost per unit. This method is effective in industries such as chemicals, food processing, and oil refining, where products go through multiple stages of production and it is difficult to track costs for individual units.

Conversion costs refer to the sum of direct labor costs and manufacturing overhead costs. These costs are incurred during the conversion of raw materials into finished products. Prime costs, on the other hand, include only direct materials and direct labor costs. Operating costs and equivalent costs are broader terms that encompass all expenses incurred in running a business, including administrative, selling, and distribution costs. Therefore, the correct answer is conversion costs.

When units are moved from one processing department to the next, the cost associated with those units must also be moved from one WIP account to the next. This process is known as transferring costs.

When materials are requisitioned for molding, it means that the materials are being taken out of the raw materials inventory to be used in the manufacturing process. This results in a decrease in the raw materials inventory, which is recorded as a credit to the raw materials inventory account. Therefore, the correct answer is credit to raw materials inventory.

Calculations for equivalent units are prepared for both direct materials and conversion costs. Equivalent units refer to the number of fully completed units that could have been produced with the inputs used during a specific period. Direct materials and conversion costs are two essential components in the production process. Direct materials include the cost of raw materials that directly go into the production of a unit, while conversion costs include the cost of labor and manufacturing overhead required to convert the raw materials into finished products. Therefore, calculations for equivalent units are necessary for both direct materials and conversion costs to accurately assess the production process's efficiency and costs.

The number of full-time equivalent employees can be calculated by adding the number of full-time employees to the product of the number of part-time employees and the ratio of their work hours to the work hours of full-time employees. In this case, there are 2,000 full-time employees and 800 part-time employees working 4 hours per day, which is half the work hours of full-time employees. Therefore, the number of full-time equivalent employees is 2,000 + (800 * 0.5) = 2,400.

When a transfer of $24,000 is made from the assembly department to the packaging department, it means that the assembly department has completed its work on the product and is transferring it to the next stage of production, which is the packaging department. In accounting terms, this transfer is recorded by crediting the Work in Process (WIP) inventory account for the assembly department. This credit entry reflects the reduction in the value of the goods in process in the assembly department. Therefore, the correct answer is "credit to WIP inventory-assembly".

The equivalent units in ending WIP inventory for materials would be 4,000 gallons. This is because all materials have already been added to the paint WIP inventory, so there are no additional equivalent units for materials in the ending inventory.

The percentage completion for direct material is none of the above because the question states that conversion costs are added evenly throughout the production process. This means that both direct material and conversion costs are added at the same rate throughout the entire process. Therefore, if the units have made it 50% of the way through the production process, it implies that both direct material and conversion costs are also 50% complete.