Accounting II - Smartbook 4
The journal entry to record the transfer of partially completed products from processing Department #1 to processing Department #2 is to debit Work in Process Department:
#2 and credit Work in Process - Department #1
Direct labor plus manufacturing overhead equals ______ cost.
Conversion Cost
Job-Order costing
When many different jobs or products are worked on each period.
When unit costs are transferred from Department A to Department B, Department B will treat cost as:
- Transferred in
The equivalent units completed are valued the same as units ______ for purposes of determining the cost per unit.
- Transferred out
True or False: The equivalent units of production computed under the weighted average method does not take into account the percentage completed of the beginning inventory.
- True
True or False: The flow of costs through manufacturing accounts is basically the same for job-order costing and process costing
- True
Which of the following equations is correct?
- Units in beginning WIP + units started or transferred in = Units in ending WIP + units completed and transferred out
The difference in the treatment of costs transferred in from Department A to Department B when compared to materials and conversion costs is that costs transferred in:
- Will always be 100% complete with respect to Department A
When using process costing, each processing department has a separate _____ ______ ______ account.
- Work in process
The journal entry to record labor cost in the first department would be to ______ (debit/credit) wages payable and _____ (debit/credit) Work in process- Department #1
- credit: Wages payable is a liability which is increased with a credit - debit: Work in process is an asset account which is increased with a debit
In process costing, manufacturing overhead costs are:
- generally applied using a predetermined overhead rate
When using process costing, which of the following can be added in any department?
- Materials, Labor and overhead
Work is performed on products, and materials, labor, and overhead costs are added to products in a(n) ____ department.
- Processing
Which of the following is not a characteristic of operation costing?
- Products are homogeneous
Industries/products more suitable for process costing than job-order costing include:
- Sunscreen - Paper towels - Flour
When ending work in process contains 500 units that are 34% completed, there are ______ equivalent units.
- 170 Units 500 x 34% = 170
FIFO method
- Bases costs solely on the costs and outputs from the current period.
To calculate cost per equivalent unit using the weighted-average method, add the cost of ____ work in process inventory to costs added during the period and divide by equivalent units of production.
- Beginning
Units in ____ work in process inventory + units started or transferred in = Units in ____ work in process inventory + units completed and transferred out
- Beginning - Ending
Costs per equivalent unit are used to value:
- Both units in ending inventory and units transferred to the next department
Examples of products that may use operation costing include:
- Clothing - Shoes - Jewelry
Weighted-average method
- Combines costs and outputs from the current and prior periods.
Characteristics of operation costing include:
- Costs are accumulated by department - Products are processed in batches
The correct journal entry to apply manufacturing costs to processing Department #1 would be to _____ Manufacturing overhead and _____ Work in process - Department #1.
- Credit - Debit
The journal entry to record material cost in the second department would include a _____ (debit/credit) to Work in Process - Department #2
- Debit
The journal entry to record the transfer of completed units to finished goods would be to ____ (debit/credit) Finished Goods and ______ (debit/credit) Work in Process.
- Debit - Credit
The journal entry to record direct labor costs in processing Department #1 is debit:
- Debit Work in process - Department #1 and credit Salaries and wages payable
Process costing accumulates costs by _____.
- Department
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 equal _______ .
- Equivalent units in ending work in process plus units transferred out
When production is completed in the last processing department, units are transferred to the ______ _____ account.
- Finished goods
A processing department produces _____ units .
- Homogeneous - Identical
When using process costing, materials can be added ____ processing department.
- In any
When many different jobs or products are worked on each period, the most likely costing system used is:
- Job-order
The two common methods for determining unit product costs are:
- Job-order costing and process costing
Operations costing is similar to process costing because:
- Labor and overhead costs are accumulated by operation or department
Similarities between job-order costing ad process costing include the:
- Manufacturing accounts used - Basic purpose to assign and compute product costs - Flow of costs through the manufacturing accounts
Number of partially completed units x Percentage completion =
Equivalent Units
Process Costing
Most commonly used in industries that convert raw materials into homogeneous (i.e. Uniform) products ex: Bricks, soda, or paper on a continuous basis
