Question: Describe the flow of costs through a process costing system.
In process costing, the cost is arrived by first adding the direct material cost at the beginning of the process and all the other cost (whether direct labor or overhead) are gradually added over the course of the production process.
Process costing system requires to compute the cost of production of the goods at every stage of process involved in production.
Direct cost at process 1
Add: Indirect cost at process 1
Add: Direct cost at process 2
Add: indirect cost at process 2
Salish Craft Beers provides the following information for the Malting Department for the month of August 2018:
Beginning Work-in-Process Inventory
Started in Production in August
Total to Account For
Completed and Transferred to Packaging Department during August
Ending Work-in-Process Inventory (30% complete for direct materials and 60% complete for conversion work)
Total Accounted For
* Includes $18,000 direct materials and $36,000 conversion costs
Complete a production cost report for the Malting Department for the month of August 2018 to determine the cost of the units completed and transferred out, and the cost of the ending Work-in-Process Inventory. Assume Salish Craft Beers uses the weighted average method.
Mayhem Electronics makes game consoles in three processes: assembly, programming, and packaging. Direct materials are added at the beginning of the assembly process. Conversion costs are incurred evenly throughout the process. The Assembly Department had no Work-in-Process Inventory on March 31. In mid-April, Mayhem Electronics started production on 99,000 game consoles. Of this number, 95,000 game consoles were assembled during April and transferred out to the Programming Department. The April 30 Work-in-Process Inventory in the Assembly Department was 45% of the way through the assembly process. Direct materials costing $301,950 were placed in production in Assembly during April, direct labor of $100,960 was assigned, and manufacturing overhead of $136,200 was allocated to that department.
1. Prepare a production cost report for the Assembly Department for April. The
company uses the weighted-average method.
2. Prepare a T-account for Work-in-Process Inventory—Assembly to show its activity during April, including the April 30 balance.
Question: Refer to Short Exercises S18-8 and S18-9. Use Complete Foods’s costs per equivalent unit of production for direct materials and conversion costs that you calculated in Short Exercise S18-9.
Calculate the cost of the 38,000 units completed and transferred out and the
24,000 units, 20% complete, in the ending Work-in-Process Inventory.
The Finishing Department reports the following data for the month:
Equivalent unit of production:
Added this month
Calculate the cost per equivalent units of production for each input. The company
uses the weighted-average method.
Question: The Jimenez Toy Company makes wooden toys. The company uses a process costing system. Arrange the company’s accounts in the order the production costs are most likely to flow, using 1 for the first account, 2 for the second, and so on.
Work-in-process inventory – Packaging
Cost of goods sold
Work-in-process inventory – Cutting
Work-in-process inventory – Finishing
Finished goods inventory
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