If a production department has 100 equivalent units of production with respect t

Question

If a production department has 100 equivalent units of production with respect to direct materials in a given reporting period, the equivalent units of production with respect to direct labor also must be 100. Answer True False If the predetermined overhead allocation rate is 350% of direct labor cost and the Painting Department's direct labor cost for the reporting period is $20,000, the following entry would record the allocation of overhead to the products processed in this department: Goods in process inventory, painting dept--------70,000 factory overhead---------------------------------------------------70,000 Answer True False If Department Q uses $60,000 of direct materials and Department T uses $15,000 of direct materials, the following journal entry would be recorded by the process cost accounting system: Answer True False In the same time period, it is possible that a production department can produce 1,000 equivalent finished units with respect to direct materials and 1,200 equivalent finished units with respect to direct labor. Answer True False

Explanation / Answer

After materials, labor and overhead costs have been accumulated in a department, the department's output must be determined so that unit cost can be computed. A department usually has some partially completed units in its ending inventory. It does not seem reasonable to count these partially completed units as equivalent to fully completed units when counting the department's out put. These partially converted units are mathematically converted into an equivalent number of fully completed units. In process costing this is done by using the following formula: Equivalent Units = Number of partially Completed Units

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