Acc505 Managerial Accounting: Week 2 Job Order and Process Costing Systems (Version 1)

Acc505 Managerial Accounting
Week 2 Job Order and Process Costing Systems (Version 1)

1. (TCO F) Computing unit product costs involves averaging in:
Job-Order Costing Process Costing
A Yes No
B Yes Yes
C No Yes
D No No

(Points : 5)
Choice A.
Choice B.
Choice C.
Choice D.

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) Assume there was no beginning work in process inventory and the ending work in process inventory is 70% complete with respect to conversion costs. Under the weighted-average method, the number of equivalent units of production with respect to conversion costs would be: (Points : 5)
the same as the units completed.
less than the units completed.
the same as the units started during the period.
less than the units started during the period.

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) Stickles Corporation incurred $79,000 of actual Manufacturing Overhead costs during August. During the same period, the Manufacturing Overhead applied to Work in Process was $75,000. The journal entry to record the incurrence of the actual Manufacturing Overhead costs would include a: (Points : 5)

debit to Manufacturing Overhead of $79,000.
credit to Manufacturing Overhead of $79,000.
credit to Work in Process of $75,000.
debit to Work in Process of $75,000.
6. (TCO F) During February, Degan Inc. transferred $60,000 from Work in Process to Finished Goods and recorded a Cost of Goods Sold of $65,000. The journal entries to record these transactions would include a: (Points : 5)
debit to Finished Goods of $65,000.
credit to Cost of Goods Sold of $65,000.
credit to Work in Process of $60,000.
credit to Finished Goods of $60,000.

1. (TCO F) Some companies use process costing and some use job-order costing. Which method a company uses depends on its industry. A number of companies in different industries are listed below:
i. Custom boat builder
ii. Frozen cranberry juice processor
iii. Concrete block manufacturer
iv. Winery that produces a number of varietal wines
v. Aluminum refiner that makes aluminum ingots from bauxite ore
For each company, indicate whether the company is most likely to use job-order costing or process costing. (Points : 15)

2. (TCO F) Job 827 was recently completed. The following data have been recorded on its job cost sheet:
Direct materials $61,050
Direct labor hours 1,332 labor hours
Direct labor wage rate $14 per labor-hour
Machine Hours 1,480 machine hours
Number of units completed 3,700 units
The company applies manufacturing overhead on the basis of machine-hours. The predetermined overhead rate is $13 per machine-hour. Compute the unit product cost that would appear on the job cost sheet for this job. (Points : 15)

3. (TCO F) Harmon Company uses the weighted-average method in its process costing system. The Curing Department of Harmon Company reported the following information for the month of November.
Units Percentage complete
with respect to conversion
Work in process, November 1 10,000 80%
Units started 28,000
Completed and transferred out 30,000
Work in process, November 30 8,000 30%

Costs for November Materials Conversion
Work in process, November 1 $34,500 $48,600
Added during the month $146,000 $194,400
All materials are added at the beginning of the process.
Required: Compute the following items using the weighted-average method:
i. The equivalent units of production for materials.
ii. The cost per equivalent unit for conversion.
iii. The total cost assigned to units transferred out of the Curing Department during November
iv. The cost assigned to work in process inventory as of November 30. (Points : 15)

4. (TCO F) Hunsicker Corporation has provided the following data for the month of January:
Inventories Beginning Ending
Raw materials $30,000 $33,000
Work In process $20,000 $18,000
Finished goods $52,000 $60,000

Additional Information
Raw material purchases $63,000
Direct labor costs $92,000
Manufacturing overhead cost incurred $75,000
Indirect materials included in manufacturing overhead costs incurred $6,000
Manufacturing overhead cost applied to work in process $69,000
Prepare a Schedule of Cost of Goods Manufactured and a Schedule of Cost of Goods Sold in good form. (Points : 15)
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