Job Order and Process Costing Systems †Quiz Essay

Question : (TCO F) Assume there is no beginning work in process inventory and the ending work in process inventory is 100% complete with respect to materials costs. The number of equivalent units with respect to materials costs under the weighted-average method is: Â  Student Answer: XX the same as the number of units put into production. less than the number of units put into production. the same as the number of units completed. less than the number of units completed. Â   Instructor Explanation: Chapter 4 Points Received: 5 of 5 Comments: Great job 2. Question : (TCO F) Process costing would be appropriate for each of the following except: Student Answer: XX custom furniture manufacturing. oil refining. grain milling. newsprint production. Instructor Explanation: Chapter 4 Points Received: 5 of 5 Comments: Great job Question : (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: Question : (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 totaled $6,000. The journal entry to record the requisition from the storeroom would include a: Student Answer: debit to Raw Materials of $74,000. XX debit to Work in Process of $68,000. credit to Manufacturing Overhead of $6,000. debit to Work in Process of $74,000. Instructor Explanation: Chapter 3 Points Received: 5 of 5 Comments: Great job 6. Question : (TCO F) Wedd Corporation had $35,000 of raw materials on hand on May 1. During the month, the company purchased an additional $68,000 of raw materials. During May, $92,000 of raw materials were requisitioned from the storeroom for use in production. These raw materials included both direct and indirect materials. The indirect materials totaled $5,000. The debits to the Work in Process account as a consequence of the raw materials transactions in May total: Student Answer: $92,000. $0. $68,000. XX $87,000. Instructor Explanation: Chapter 3 Points Received: 5 of 5 Comments: Great job 1. Question : (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. Student Answer: Job order costing is where a company produces different products each period, they are made to order, All costs are traced to each job and requires that each job has documentation of all costs associated with it. Process costing is when a company produces a single product for a long period of time and the product is the same or very similar, the costs are accumulated by department. i. Custom boat builder= Job-order costing ii. Frozen cranberry juice processor= process costing iii. Concrete block manufacturer= process costing iv. Winery that produces a number of varietal wines= Job-order Costing v. Aluminum refiner that makes aluminum ingots from bauxite ore= process costing 3. Question : (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. Student Answer: Harmon Company i. The equivalent units of production for materials. = 38,000 (See math below) Transferred out= 30,000+ work in process 8,000= 38,000 ii. The cost per equivalent unit for conversion.= $7.50 (see math below) total weighted average units= 8,000 *.3= 24000 plus 30,000 that was transfer= 32,400 Conversion- 48,600 + added during month 194,400= 243,000 cost per unit 243,000/ total weighted avg unit 32,400 = $7.50 per unit iii. The total cost assigned to units transferred out of the Curing Department during November. = Materials= $142,500 (see math below) Conversion= $225,000 Total cost= $367,500 Materials = work in process plus added during month ( 34,500+146,000) = 180500 transferred materials divide by total average unit= 30,000/38,000=.7894 180500*.7894=$142,500 Materials Conversion= materials transferred times cost per equivalent unit 30,000*$7.50= 225,000 Add together for total cost= 225000+142500= 367500 iv. The cost assigned to work in process inventory as of November 30.= Materials $38,000 + conversion $18,000= Total cost $56,000 (See math below) Materials times ending work in process divide total materials= 34500+146000= 180500 180500* (8,000/38,000)= 38,000 Conversion ending work process inventory 8,000*.3=2,400 conversion cost conversion times per unit= 2,400*$7.50= $18,000 Total cost= 38,000+18,000= 56000 Instructor Explanation: Points Received: 15 of 15 Comments: Great job 4. Question : (TCO F) Honeysuckle Corporation has provided the following data for the month of January: Inventories Beginning Ending Raw materials $40,000 $23,000 Work In process $9,000 $13,000 Finished goods $52,000 $45,000 Additional Information Raw material purchases $68,000 Direct labor costs $90,000 Manufacturing overhead cost incurred $44,000 Indirect materials included in manufacturing overhead costs incurred $8,000 Manufacturing overhead cost applied to work in process $39,000 Prepare a Schedule of Cost of Goods Manufactured and a Schedule of Cost of Goods Sold in good form. Student Answer: Honeysuckle Corporation Schedule of Cost of Goods Manufactured Month of January Direct Materials: Raw Materials Inventory Begining $40,000 Add: Purchases of raw materials: $68,000 Raw Materials Available for use $108,000 Less Raw Materials Ending $(23,000) Raw Materials Used in Production $85,000 Direct Labor Cost $90,000 Manufacturing overhead Manufacturing overhead cost incurred $44,000 Indirect materials included in manufacture overhead costs incurred $8,000 Manufacturing overhead cost applied to work in process $39,000 Total Manufacturing Overhead $91,000 Total Manufacturing Cost $266,000 Add Work in Process Inventory, Beginning $9,000 Less Work Process Inventory end $(13,000) Cost of Goods Manufactured $528,000 Honeysuckle Cost of Goods Sold Month of January Finished Goods Inventory $45,000 Add Cost of Goods Manufactured $528,000 Goods Available for Sale $573,000 Deduct Finished Goods Inventory $45,000 Cost of Goods Sold $618,000