AC320: Assignment 7
The following examples briefly describe the manufacture of two different products. Which costing method (job-order or process) would be the best method to use for each project? I. Fred Puetz manufactures Fred's Wine Cooler. Fred once made the statement, "People can have any flavor of Fred's Wine Cooler they want as long it's boysenberry." II. Ahmad Aerondonetics is manufacturing three space shuttles for the country of Kricherra. Each shuttle is slightly different and production will last approximately two years. I II a. Process Process b. Job-order Job-order c. Process Job-order d. Job-order Process
C Fred's product is homogenous; whereas, Ahmad's product is heterogeneous.
Which of the following organizations would most likely use a process costing system? -Gasoline refinery. -Automobile retailer. -Airplane manufacturer. -Public accounting firm.
Gasoline refinery. (b) is a retailer, (c) and (d) would use job costing.
In computing the current period's manufacturing cost per equivalent unit, the FIFO method of process costing considers: (CPA adapted) -only current period costs. -current period costs plus cost of beginning work-in-process inventory. -current period costs less cost of beginning work-in-process inventory. -current period costs plus the cost of ending work-in-process inventory.
Only current period costs FIFO includes only the current period costs. Beginning WIP is segregated.
Under which of the following conditions will the FIFO method produce the same cost of goods manufactured as the weighted-average method? -There is no ending inventory. -There is no beginning inventory. -The beginning and ending inventories are equal. -The beginning and ending inventories are both 50% complete.
There is no beginning inventory. Weighted-average and FIFO are the same when there is no beginning WIP.
In the computation of the manufacturing cost per equivalent unit, the weighted-average method of process costing considers: -current costs only. -current costs plus cost of beginning Work-in-Process Inventory. -current costs plus cost of ending Work-in-Process Inventory. -current costs less cost of beginning Work-in-Process Inventory.
current costs plus cost of beginning Work-in-Process Inventory. This is the basic concept of weighted-average. FIFO considers current costs only.
An equivalent unit of conversion costs is equal to the amount of conversion costs required to: -start a unit. -start and complete a unit. -transfer a unit in. -transfer a unit out.
start and complete a unit. This is a basic definition of equivalent units.
Blue Company has beginning and ending Work-in-Process Inventories that are 45% and 10% complete, respectively. Materials are added at the beginning of the process. If first-in, first-out (FIFO) process costing is used, the total equivalent units for materials will equal the number of units: -transferred out during the period. -started and completed during the period. -started into the process during the period. -started into the process plus the units in the ending inventory.
started into the process during the period. Beginning WIP has all the materials. The equivalent units will be started & completed plus the ending WIP = units started.
An operations costing system is: -identical to a process costing system except that actual cost is used for manufacturing overhead. -the same as a process costing system except that materials are allocated on the basis of batches of production. -the same as a job order costing system except that materials are accounted for in the same way as they are in a process costing system. -the same as a job order costing system except that no overhead allocations are made since actual costs are used throughout. -a system in which manufacturing activities are finely divided into individual, discrete steps or operations.
the same as a process costing system except that materials are allocated on the basis of batches of production. This statement is a description of operations costing.