Managerial Accounting Chapter 4
Which of the following is not a characteristic of operation costing?
Products are homogeneous.
True or false: The flow of costs through manufacturing accounts is basically the same for job-order costing and process costing.
True Both costing systems use the same manufacturing accounts to post costs.
Similarities between job-order costing and process costing include the
basic purpose to assign and compute product costs flow of costs through the manufacturing accounts manufacturing accounts used
Direct labor plus manufacturing overhead equals _____ cost.
conversion
Characteristics of operation costing include ______
costs are accumulated by department products are processed in batches
The journal entry to record material cost in the second department includes a __________________ to to Work in Process-Department #2.
debit
Process costing accumulates costs by _________________
department
Conversion costs are __________________
direct labor plus manufacturing overhead
Operations costing is similar to job-order costing because _______________
each batch is charged for its own specific materials
Equivalent units of production under the weighted-average method equals:
equivalent units in ending work in process plus units transferred out.
Process costing produces _______________ units
homogenous
Operations costing is similar to process costing because
labor and overhead costs are accumulated by operation or department
Each department has a separate Work in Process account when using
process
When unit costs are transferred from Department A to Department B, Department B will treat the costs as ___________
transferred in
The equivalent units completed are valued the same as units ____________ for purposes of determining the cost per unit
transferred out
The equivalent units completed are valued the same as units _____________ for purposes of determining the cost per unit
transferred out
Costs transferred in from Department A to Department B
will always be 100% complete with respect to Department A
When using process costing, each processing department has a separate __________ _____________ ____________ account
work in process
In process costing, manufacturing overhead costs are ________________
generally applied using a predetermined overhead rate
A processing department is an organization unit ______.
where work is performed on a product, and materials, labor or overhead are added
Number of partially completed units x Percentage completion = ___________ units
equivalent
To report ending inventory, partially completed units are translated into _____________ units
equivalent
Methods to calculate departmental unit costs include ______
weighted-average FIFO
Industries/products more suitable for process costing than job-order costing include
paper towels. sunscreen. flour.
Canners Company uses weighted-average costing. Beginning work in process inventory had $3,650 of material costs. During the period, $5,000 of materials and $9,250 in conversion costs were added. If there are 250 equivalent units of production for materials, the cost per equivalent unit for materials is _____________
$34.60 ($3,650 + $5,000) ÷ 250 = $34.60
Costs in beginning work in process inventory was $4,500 and $37,800 in costs were added during the period. If there are 7,050 equivalent units, the cost per equivalent unit under the weighted-average method is $
$6
FIFO method
Bases costs solely on the costs and outputs from the current period.
Weighted-average method
Combines costs and outputs from the current and prior periods.
Equivalent units of production equals the number of units transferred to the next department (or finished goods) plus equivalent units in ending work in process under which method(s) of costing?
Weighted-average only
The journal entry to record direct materials costs in processing Department #1 is debit
Work in Process-Department #1 and credit Raw Materials
The journal entry to record direct labor costs in processing Department #1 is debit _____________
Work in process-Department #1 and credit Salaries and wages payable
In process costing, manufacturing overhead costs are distributed to each department _____________________
according to the amount of the allocation base incurred in the department
Differences between job-order and process costing include that process costing
accumulates costs by department is used for indistinguishable products
True or false: Process costing is used when a company produces a continuous flow of units that are homogeneous.
True In process costing, all units of the product are identical.
Costs per equivalent unit are used to value ______.
both units in ending inventory and units transferred to the next department
The journal entry to record labor cost in the first department is _______________ wages payable and _______________Work in process-Department #1
credit, debit