Process Costing: Departments & Cost Accumulation

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Which of the following is a component of units in the context of Costos II?

Indirect Costs
Direct Materials
Direct Labor
Initial inventory of the production process (correct)

In Costos II, what is considered as an element of 'Costs'?

Direct Labor (correct)
Ending inventory of production process
Transferred units to Department B
Equivalent Production

What does the equivalent production calculation primarily combine?

The initial and ending inventory amounts
All products that can be created in a certain time (correct)
The cost of direct materials only
Only the finished products in a process

What is the amount of direct materials in Department A?

$31200 (B) Signup and view all the answers

What is the amount of indirect costs in Department A?

$101892 (D) Signup and view all the answers

How many quantity of units were transferred to department B?

46000 (B) Signup and view all the answers

What is the amount of direct labor in Department B?

35700 (B) Signup and view all the answers

From the table provided, what are the total equivalent units for Direct Labor in Dept. B?

40000 (A) Signup and view all the answers

In a process costing system, where are the main costs accumulated?

Departments or cost centers (D) Signup and view all the answers

What happens to units when they are completed in a department under process costing?

They are transferred to the next department (B) Signup and view all the answers

What three costs are generally charged to each department in a process costing system?

Direct materials, direct labor, and indirect manufacturing costs (B) Signup and view all the answers

In the example provided, what is included in the cost of the units transferred to the next department?

Materials in process (A) Signup and view all the answers

Which type of manufacturing process is best suited for a cost system by processes?

Massive or continuous production (D) Signup and view all the answers

In a cost system by processes, how are production costs accumulated?

By department or cost center (D) Signup and view all the answers

How is the cost per unit calculated in the example?

Total cost divided by number of finished units (D) Signup and view all the answers

What report is prepared at the end of the period for each department?

Production cost (B) Signup and view all the answers

What is a department considered within a factory in the context of cost accounting?

A functional division where activity is executed (C) Signup and view all the answers

According to the flowchart, which of the following is added to 'Units that start the process or are received from another department'?

Inventory in process (A) Signup and view all the answers

What happens when multiple processes are executed in a department?

It is divided into cost centers (D) Signup and view all the answers

Who is typically responsible for the costs incurred within a department or cost center?

Supervisors within the area (B) Signup and view all the answers

According to the flowchart, what is the result of adding 'Units finished/transferred' to 'Units finished and not transferred'?

No. units transferred (B) Signup and view all the answers

What is one of the main objectives of a cost system by processes?

Determining final unit costs (B) Signup and view all the answers

What happens to units that are not completed at the end of a reporting period?

They are considered units in process (B) Signup and view all the answers

What is a 'cost of production report' used for in a cost system by processes?

Showing cost assignments (A) Signup and view all the answers

In a cost system by processes, how do costs accumulate as units move through the production process?

Costs accumulate as units progress (B) Signup and view all the answers

What account is charged with the costs incurred in a department?

Work in process inventory (C) Signup and view all the answers

What does the cost of production report analyze?

Activities of a department during a specific period (D) Signup and view all the answers

What is 'units still on hand' also known as?

Ending work in process (B) Signup and view all the answers

Which of the following is NOT a common section in a cost of production report?

Production at other companies (B) Signup and view all the answers

What does the 'report in quantities' section primarily track?

The physical flow of units in production (D) Signup and view all the answers

In cost accounting, what are the elements of cost?

Materials, Labor, and Overhead (A) Signup and view all the answers

What happens to units that are 'finished and transferred'?

They are moved to the next department. (C) Signup and view all the answers

In the cost accounting equation, what does 'units started in process' refer to?

Units introduced into production during the period (A) Signup and view all the answers

What is the purpose of tracking units in a department?

To account for all units from start to finish. (B) Signup and view all the answers

Where can each element of cost be found?

Separately on the report or support relation (A) Signup and view all the answers

What is the starting point when determining how many units were transferred from one department to another?

Finding the total units in process (C) Signup and view all the answers

What is added to the number of units completed to find the production equivalent for each cost element?

The equivalent units of the final production in process inventory (A) Signup and view all the answers

When is the production equivalent calculated?

When the inventory of final production in process is converted into 'finished' units (D) Signup and view all the answers

What is the formula for calculating the Production Equivalent?

Units directly terminated + (IF PP x % of advance) (A) Signup and view all the answers

What costs are included in the cost of production?

Material, direct labor, and manufacturing overhead costs (D) Signup and view all the answers

In Department A, what type of cost is $34,572?

Indirect manufacturing costs (D) Signup and view all the answers

In the unit cost calculation, what does 'MOD' refer to?

Direct Labor (C) Signup and view all the answers

In calculating unit cost, to what does CIF refer?

Indirect manufacturing costs (D) Signup and view all the answers

What is the direct labor cost in Department B?

$35,700 (C) Signup and view all the answers

How is the unit cost of material direct calculated?

Material costs consumed during period / Production of equivalent direct material. (A) Signup and view all the answers

What is the term for costs from the previous department that are included in a subsequent department's costs?

Costs of the prior department (B) Signup and view all the answers

Why is it unnecessary to calculate equivalent materials for transferred units?

Since these are always 100% finished when they are transferred out (D) Signup and view all the answers

How is the total cost of a unit product calculated?

Summing the unit costs of direct material, direct labor (MOD), and indirect manufacturing costs (CIF) (B) Signup and view all the answers

According to the example, what is the Cost of Unit product?

$1.89 (A) Signup and view all the answers

Cost by Processes

A system where costs are tracked through different departments or cost centers.

Departmental Costs

Costs directly assigned to a specific department, including materials, labor, and overhead.