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Chapter 16: Q5BTN (page 761)

Many companies acquire software to help them monitor and control their costs and as an aid to their accounting systems. One company that supplies such software is proDacapo (prodacapo.com). There are many other such vendors. Access proDacapo’s website, click on “Products,” then click on “Prodacapo Process Management,” and review the information displayed.

Required

How is process management software helpful to businesses? Explain with reference to costs, efficiency, and examples, if possible.

Short Answer

Expert verified

Process management softwareallows companiesto measureand improve the performance of their processes.

Step by step solution

01

Meaning of Process Management Software

Business process management software is a program that helps customers streamline a company's operating processes and workflow to make them more effective and adaptable to changing market conditions.

02

Explaining how is process management software helps businesses

A firm can benefit from such software in several ways.

  1. Organizations can develop process maps using this software to examine and explain processes and workflows.
  2. It makes papers, reports, and analyses accessible through web browsers.
  3. It enables businesses to evaluate and enhance the efficiency of their procedures.
  4. It enables businesses to pinpoint, depict, and quantify issues with their processes and their potential for improvement to save time and money.

It includes a cost per process and activity computation.

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Most popular questions from this chapter

Question: The Plastic Flowerpots Company has two manufacturing departments, molding, and packaging. At the beginning of the month, the molding department has 2,000 units in inventory, 70% complete as to materials. During the month, the molding department started 18,000 units. At the end of the month, the molding department had 3,000 units in ending inventory, 80% complete as to materials. Units completed in the molding department are transferred into the packaging department.

Cost information for the molding department for the month is as follows:

Beginning work in process inventory (direct materials)

$ 1,200

Direct materials added during the month

27,900

Using the weighted-average method,(b) cost per equivalent unit of production for materials for the month. (Round to two decimal places.)

At the end of a period, what balance should remain in the Factory Overhead account?


Question: Switch Co. manufactures a single product in one department. Direct labor and overhead are added evenly throughout the process. Direct materials are added as needed. The company uses monthly reporting periods for its weighted-average process costing. During January, Switch completed and transferred 220,000 units of product to finished goods inventory. Its 10,000 units of beginning work in process consisted of \(7,500 of direct materials and \)49,850 of conversion. In process at month-end are 40,000 units (50% complete with respect to direct materials and 30% complete with respect to conversion). During the month, the company used direct materials of \(112,500 in production and incurred conversion costs of \)616,000.

Required

  • 1.Prepare the company’s process cost summary for January using the weighted-average method.
  • 2.Prepare the journal entry dated January 31 to transfer the cost of completed units to finished goods inventory.

Analysis Component

  • 3.The cost accounting process depends on several estimates.
    • a.Identify two major estimates that affect the cost per equivalent unit.
    • b.In what direction might you anticipate a bias from management for each estimate in part 3a (assume that management compensation is based on maintaining low inventory amounts)? Explain your answer.

Hi-Test Company uses the weighted-average method of process costing to assign production costs to its products. Information for September follows. Assume that all materials are added at the beginning of its production process, and that conversion costs are added uniformly throughout the process.

Work in process inventory, September 1 (2,000 units, 100% complete with respect to direct materials, 80% complete with respect to direct labor and overhead; includes \(45,000 of direct materials cost, \)25,600 in direct labor cost, \(30,720 overhead cost)

\)101,320

Units started in September

28,000

Units completed and transferred to finished goods inventory

23,000

Work in process inventory, September 30 (__?__ units, 100% complete with respect to direct materials, 40% complete with respect to direct labor and overhead)

\(

Costs incurred in September

Direct materials

\)375,000

Conversion

$341,000

Compute each of the following, assuming Hi-Test uses the weighted-average method of process costing.

1. The number of physical units that were transferred out and the number that are in ending work in process inventory.

2. The number of equivalent units for materials for the month.

3. The number of equivalent units for conversion for the month.

4. The cost per equivalent unit of materials for the month.

5. The cost per equivalent unit for conversion for the month.

6. The total cost of goods transferred out.

7. The total cost of ending work in process inventory

Refer to the data in Problem 16-4A. Assume that Tamar uses the FIFO method to account for its process costing system. The following additional information is available:

  • Beginning work in process consisted of 3,000 units that were 100% complete with respect to direct materials and 40% complete with respect to conversion.
  • Of the 22,200 units completed, 3,000 were from beginning work in process. The remaining 19,200 were units started and completed during May.

Required

1. Prepare the company’s process cost summary for May using FIFO.

2. Prepare the journal entry dated May 31 to transfer the cost of completed units to finished goods inventory.
See all solutions

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