dwProcess Costing

Question 1

process cost systems

Answer 1

apply costs to similar products that are mass produced continuously

Question 2

so should service companies use process costing or job order costing?

Answer 2

Depends on if the work is routing or non routine

Question 3

JOB ORDER COST FLOW

Answer 3

DM, DL, MOH > WIP > FG int > COGS

Question 4

Process Cost flow

Answer 4

DM,DL,MOH > WIP > WIP 2 > FG > COGS

Question 5

How are process cost flow and job order cost flow ismilar?

Answer 5

1. same manufacturing cost elements (dm, dl, moh)
2. accumulating cost of materials, labor, overhead (debit rm to rm inventory, fl to FL, moh costs to MOH)
3. flow of costs: same accounts (wip, fg, cogs)

Question 6

Differences between job order cost and process cost system

Answer 6

1. # of WIP: multiple WIP used in PC
2. Docs: production cost report created for each department
3. point at which costs totaled: process cost system totals cost at end of time
4. unit cost comp: total manufacturing costs/units produced

Question 7

docs to track cost in job order system

Answer 7

charges costs to individuals jobs and summarizes them in a job cost sheet

Question 8

when are job order cost totaled

Answer 8

by system when the jo bis complete

Question 9

what are the unit cost

Answer 9

total cost per job divided by units produced

Question 10

how to make JE’s for work in process accts?

Answer 10

Work in Process - 1
Work in Process - 2
RM Inventory

Work in Process - 1
Work in Process - 2
Factory Labor

Work in Process - 1
Work in Process - 2
MOH

Question 11

Transfering from first WIP to second

Answer 11

WIP - 2
WIP - 1

Question 12

Transfered to finished goods

Answer 12

FG inventory
WIP - 2

Question 13

equivalent units of production

Answer 13

measure the work done in a period

expressed in fully compelted units

Question 14

formula for equivalent units of production. initial

Answer 14

units completed and transfered out + equivalent units of ending WIP

**the beginning work in process is not part of the equivalent-units-of-production formula

Question 15

equivalent units of production- materials

Answer 15

units completed and transsfered out- materials

+

equivalent units of ending work in process- materials

Question 16

equivalent units of production - conversion costs

Answer 16

units completed and transfered out- conversion costs

+

equivalent units of ending work in process - converison costs

Question 17

production cost report steps

Answer 17

1. compute physical unit flow
2. compute equivalent units of production
3. compute unit production costs
4. prepare cost reconoculiation schedule

Question 18

Computing unit flow!

Answer 18

Work in Process begin
DM
conversion costs
Units started into prod during June
Units ocmpleted and trnsferred to WIP2
WIP end
DM
conversion costs

Question 19

Cost section

Answer 19

WIP, begin
DM ##
cOnversion costs ##
Cost of WIP begin

COsts incurred during year
DM ##
COnversion costs ##
Costs incurred in june

Question 20

computing physcial unit flow stesp

Answer 20

UNITS STARTED/TRANSFERRED TO PRODUCTION + UNITS IN PROCESS AT BEGINNING OF PERIOD = TOTAL UNITS TO BE ACCOUNTED FOR

then you account by the output for the period; units transferred out during the period + any units in process at the end of the period = total units accoutned for

Question 21

how to compute equivalent units of prodcuton

Answer 21

107

Question 22

how to compute unit production costs

Answer 22

107

Question 23

107 & 108

Question 24

Costing Systems—Final Comments Companies often use a combination of a process cost and a job order cost system. Called operations costing, this hybrid system is similar to process costing in its assumption that standardized methods are used to manufacture the product. At the same time, the product may have some customized, individual features that require the use of a job order cost system. Consider, for example, the automobile manufacturer Ford Motor Company. Each vehicle at a given plant goes through the same assembly line, but Ford uses different materials (such as seat coverings, paint, and tinted glass) for different vehicles. Similarly, Kellogg’s Pop-Tarts® toaster pastries go through numerous standardized processes—mixing, fi lling, baking, frosting, and packaging. The pastry dough, though, comes in different fl avors—plain, chocolate, and graham— and fi llings include Smucker’s® real fruit, chocolate fudge, vanilla creme, brown sugar cinnamon, and s’mores. A cost-benefi t trade-off occurs as a company decides which costing system to use. A job order cost system, for example, provides detailed information related to the cost of the product. Because each job has its own distinguishing characteristics, the system can provide an accurate cost per job. This information is useful in controlling costs and pricing products. However, the cost of implementing a job order cost system is often expensive because of the accounting costs involved. On the other hand, for a company like Intel, which makes computer chips, is there a benefi t in knowing whether the cost of the one-hundredth chip produced is different from the one-thousandth chip produced? Probably not. An average cost of the product will suffi ce for control and pricing purposes. In summary, when deciding to use one of these systems, or a combination system, a company must weigh the costs of implement