ch. 4
When two service departments provide services to each other, those services are referred to as _______.
interdepartmental services
Sneaker Styles Company manufactures a wide variety of sneakers. Which of the following systems is most suitable for Sneaker Styles?
operation costing
equivalent units in ending work in process inventory =
= # of partially completed units * % completion
cost per equivalent unit =
= (cost of beg work in process inv. + cost added during the period) / equivalent units of production
Service department costs allocated to an operating department =
= Service department costs before allocation × (Allocation base attributable to operating department ÷ Total amount of allocation base attributable to all operating departments)
cost of ending work in process inventory =
= materials cost in ending work in process inv. + conversion cost in ending work in process inv.
Cost of units transferred out=
= materials cost in units transferred out + conversion cost in units transferred out
equivalent units of production =
= units transferred to the next department or to finished goods + equivalent units in ending work in process inventory
cost per equivalent unit =
=(cost of beg work in process inv. + costs added during the period) / equivalent units of production for the period
D/C: 5. Finished snowboards that cost $100,000 were sold to customers.
D: cost of goods sold C: finished goods
D/C: 4. Finished snowboards worth $80,000 were transferred from the Shaping Department to the finished goods warehouse.
D: finished goods C: work in process - shaping
D/C: 1. Raw materials worth $12,000 were issued for use in the Cutting Department.
D: work in process - cutting C: Raw materials
D/C: 2. Manufacturing overhead was applied to the Shaping Department, $10,000.
D: work in process - shaping C: manufacturing overhead
D/C:3. Unshaped, cut snowboards worth $60,000 were transferred from the Cutting Department to the Shaping Department.
D: work in process - shaping C: work in process - cutting
Which of the following statements about processing costing is false? -Process costing accumulates costs by department. -Process costing assigns departmental costs uniformly to all identical units that pass through the department during a period. -Process costing systems compute unit costs by department. -Process costing is used when a company produces a continuous flow of units that are distinguishable from one another.
Process costing is used when a company produces a continuous flow of units that are distinguishable from one another.
Which of the following statements about companies that use processing costing is false? -A processing department is an organizational unit where work is performed on a product and where materials, labor, or overhead costs are added to the product. -Costs are accumulated by department. - Raw material costs are added only to the first processing department. -A separate Work in Process account is maintained for each processing department.
Raw material costs are added only to the first processing department.
Which of the following statements is true of the step-down method?
When the step-down method is used, the allocation base attributable to a service department that has already been allocated is ignored.
The cost of beginning work in process inventory plus the costs added to production during the period equals the _______.
total cost to be accounted for
A company has three processing departments: Mixing, Baking, and Packaging. The Baking Department transfers 500 units to the Packaging Department. How will the Packaging Department account for the costs of those 500 units?
cost transferred in
conversion cost is composed of ___
direct labor cost and manufacturing overhead cost
