Acc505 Managerial Accounting: Week 2 Job Order and Process Costing Systems (Version 2)

Acc505 Managerial Accounting Week 2: Job Order and Process Costing Systems (Version 2) 1. (TCO F) For which situation(s) below would an organization be more likely to use a job-order costing system of accumulating product costs rather than a process costing system? (Points : 5) A steel factory that processes iron ore into steel bars A factory that processes sugar and other ingredients into black licorice A costume maker that makes specialty costumes for figure skaters All of these 2. (TCO F) Process costing would be appropriate for each of the following except: (Points : 5) custom furniture manufacturing. oil refining. grain milling. newsprint production. 3. (TCO F) Lucas Company uses the weighted-average method in its process costing system. The company adds materials at the beginning of the process in the Forming Department, which is the first of two stages in its production process. Information concerning operations in the Forming Department in October follows: Units Material Cost Work in process on October 1 6,000 $3,000 Units started in October 50,000 $25,560 Units completed and transferred to next Department during October 44,000 What was the materials cost of work in process at on October 31? (Points : 5) $3,060 $5,520 $6,000 $6,120 4. (TCO F) In a job-order costing system, the use of direct materials that have been previously purchased is recorded as a debit to:(Points : 5) Raw Materials Inventory. Work in Process Inventory Finished Goods Inventory Manufacturing Overhead 5. (TCO F) During December at Ingrim Corporation, $74,000 of raw materials were requisitioned from the storeroom for use in production. These raw materials included both direct and indirect materials. The indirect materials totalled $6,000. The journal entry to record the requisition from the storeroom would include a: (Points: 5) debit to Raw Materials of $74,000. debit to Work in Process of $68,000. credit to Manufacturing Overhead of $6,000. debit to Work in Process of $74,000. 6. (TCO F) Valles Corporation had $22,000 of raw materials on hand on February 1. During the month, the company purchased an additional $75,000 of raw materials. The journal entry to record the purchase of raw materials would include a: (Points: 5) credit to Raw Materials of $97,000. debit to Raw Materials of $97,000. credit to Raw Materials of $75,000. debit to Raw Materials of $75,000. 1. (TCO F) Whether a company uses process costing or job-order costing depends on its industry. A number of companies in different industries are listed below: i. Brick manufacturer ii. Contract printer that produces posters, books, and pamphlets to order iii. Natural gas production company iv. Dairy farm v. Coal mining company vi. Specialty coffee roaster (roasts small batches of specialty coffee beans) For each company, indicate whether the company is most likely to use job-order costing or process costing. 2. (TCO F) Job 484 was recently completed. The following data have been recorded on its job cost sheet: Direct materials $57,240 Direct labor hours 1,692 DLHs Direct labor wage rate $12 per DLHS Number of units completed 3,600 units The company applies manufacturing overhead on the basis of direct labor-hours. The predetermined overhead rate is $24 per direct labor-hour. Compute the unit product cost that would appear on the job cost sheet for this job. (Points : 15) 3. (TCO F) Miller Company manufactures a product for which materials are added at the beginning of the manufacturing process. A review of the company's inventory and cost records for the most recently completed year revealed the following information: Units Materials Conversion Work in process. Jan. 1 100,000 $100,000 $157,500 (80% complete with respect to conversion costs) Units started into production 500,000 Costs added during the year: Materials $650,000 Conversion $997,500 Units completed during the year 450,000 The company uses the weighted-average cost method in its process costing system. The ending inventory is 50% complete with respect to conversion costs. Required: i. Compute the equivalent units of production and the cost per equivalent units for materials and for conversion costs. ii. Determine the cost transferred to finished goods. iii. Determine the amount of cost that should be assigned to the ending work in process inventory. (Points : 15) 4. (TCO F) Weisinger Corporation has provided the following data for the month of January: Inventories Beginning Ending Raw materials $28,000 $29,000 Work In process $16,000 $14,000 Finished goods $42,000 $54,000 Additional Information Raw material purchases $56,000 Direct labor costs $87,000 Manufacturing overhead cost incurred $51,000 Indirect materials included in manufacturing overhead costs incurred $3,000 Manufacturing overhead cost applied to work in process $55,000 Prepare a Schedule of Cost of Goods Manufactured and a Schedule of Cost of Goods Sold in good form. (Points: 15)