Podcast Beta
Questions and Answers
If the spoilage is charged to a specific job, what is the cost per unit of Job 168?
P123
Which of the following statements regarding work in process is not correct?
In a job order costing system, the net cost of normal spoilage is equal to: _____
zero
What are the equivalent units for conversion costs in the processing department?
Signup and view all the answers
How many units were in the beginning work-in-process for the Archer Company in April 2023?
Signup and view all the answers
Which of the following reflects the correct order of tasks to be performed by Michael, Inc. accounting department?
Signup and view all the answers
In the Archer Company's production using FIFO, what were the total costs assigned to units transferred out this period?
Signup and view all the answers
Companies using a process-cost accounting system would typically track costs for each process rather than each job.
Signup and view all the answers
What is the cost of work-in-process inventory as of October 31, 2023?
Signup and view all the answers
What is the cost of finished goods inventory as of October 31, 2023?
Signup and view all the answers
The term direct cost and indirect cost are commonly used in accounting. Classifying cost as either direct or indirect depends upon:
Signup and view all the answers
Which of the following statements is correct?
Signup and view all the answers
In the preparation of the schedule of Cost of Goods Manufactured, the accountant incorrectly included rental expense on the firm's retail facilities as part of manufacturing overhead. This inclusion would:
Signup and view all the answers
If 9,000 T-shirts are sold next month, Arlo's T-shirt Shop should expect net operating income of (use high-low method to separate mixed costs, if any):
Signup and view all the answers
Caraco Corporation has provided production and average cost data. The best estimate of the total cost to manufacture 7,300 units is closest to:
Signup and view all the answers
How many units were produced during 2023?
Signup and view all the answers
Which of the following statements concerning cost behavior is true?
Signup and view all the answers
The following data have been collected for four different cost items: Which of the following classifications of these cost items by cost behavior is correct?
Signup and view all the answers
Study Notes
Cost Accounting and Control
- The New Era University College of Accountancy is having a qualifying examination for Cost Accounting and Control.
Direct and Indirect Costs
- Direct costs are costs that can be directly traced to a specific product or department.
- Indirect costs are costs that cannot be directly traced to a specific product or department.
Cost of Goods Manufactured
- The cost of goods manufactured is the total cost of producing goods during a period.
- It includes the cost of direct materials, direct labor, and manufacturing overhead.
Cost Behavior
- Cost behavior refers to the way costs respond to changes in the level of activity.
- There are three types of cost behavior: fixed, variable, and mixed.
Overhead Allocation
- Overhead allocation is the process of assigning overhead costs to products or departments.
- There are several methods of overhead allocation, including the direct labor-hour method, the machine-hour method, and the activity-based costing method.
Service Department Costs
- Service department costs are costs incurred by support departments that provide services to production departments.
- These costs are allocated to production departments using the direct method, the step-down method, or the reciprocal method.
Activity-Based Costing
- Activity-based costing (ABC) is a method of costing that assigns costs to products or services based on the activities they require.
- ABC uses cost drivers to assign costs to products or services.
Job-Order Costing
- Job-order costing is a method of costing that assigns costs to specific jobs or orders.
- It is used in situations where each job or order is unique and has different costs.
Process Costing
- Process costing is a method of costing that assigns costs to products or services based on the processes they require.
- It is used in situations where products or services are produced in a continuous process.
Spoilage
- Spoilage refers to the loss of units or materials during the production process.
- There are two types of spoilage: normal and abnormal spoilage.
Cost of Goods Sold
- The cost of goods sold is the total cost of producing goods that are sold during a period.
- It includes the cost of direct materials, direct labor, and manufacturing overhead.
Inventory Valuation
- Inventory valuation is the process of assigning a value to inventory.
- It is used to determine the cost of goods sold and the value of inventory on the balance sheet.
Standard Costing
- Standard costing is a method of costing that uses predetermined standard costs to value inventory and cost of goods sold.
- It is used to compare actual costs to standard costs and to identify variances.
Variance Analysis
- Variance analysis is the process of analyzing the difference between actual costs and standard costs.
- It is used to identify the causes of variances and to take corrective action.
Flexible Budgeting
- Flexible budgeting is a method of budgeting that uses a flexible budget to adjust for changes in the level of activity.
- It is used to evaluate the performance of a company or department.### Standard Costing
- The Fletcher Company uses standard costing to compute its standard quantity of material allowed for October production.
Overhead Application
- Web Company applies manufacturing overhead to units of product based on machine hours, with a denominator activity of 80,000 machine hours.
Overhead Variances
- A fixed overhead volume variance of P6,400 unfavorable indicates a total budgeted fixed overhead cost for the month.
Standard Cost System
- In a standard cost system, standard cost and budget information is used to compute variances.
Journal Entries
- When the actual price paid on credit for a raw material exceeds its standard price, the journal entry would include a debit to Raw Materials Purchases and a credit to Accounts Payable.
Labor Variances
- Replacing striking assembly line workers with office workers may affect labor variances, as assembly line workers are paid P18 per hour while office workers are paid $10 per hour.
Work in Process Inventory
- In a standard cost system, Work in Process Inventory is debited with standard cost.
Overhead Application
- If actual direct labor hours (DLHs) are less than standard direct labor hours allowed and overhead is applied on a DLH basis, a favorable overhead variance results.
Material Usage
- If 80,000 units were produced in April, with a standard quantity of material allowed per unit of 2 pounds at a standard cost of P5 per pound, and a favorable usage variance of P40,000, the actual quantity of materials used can be computed.
Joint Process
- Tropical Company manufactures three products in a joint process, with a joint cost of P25,000.
Product Profitability
- Processing Product B beyond the split-off point will increase profit.
- To maximize profits, Tropical should process further the products with higher profit margins.
Joint Cost Allocation
- Using the sales value at split-off method, the portion of the total joint costs allocated to product J was P9,000, and the total joint costs can be computed.
Joint Products
- Joint products are identifiable as individual products only upon reaching the split-off point, and have relatively minor sales value when compared to the other products.
Decision-Making
- In deciding whether to sell at split-off or process further, management should consider the additional revenue and costs of further processing.
JIT Manufacturing System
- In a JIT manufacturing system, the journal entry to record the purchase of raw materials at P1.00 per unit on account would include a debit to Raw Materials Inventory and a credit to Accounts Payable.
JIT Costing System
- In a JIT costing system, the balance in the Conversion Cost account can be computed based on transactions during the period.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Related Documents
Description
Solve a problem on cost accounting and control, where the controller of a company needs to determine the ending inventory balances for the first quarter. Use the provided information to calculate the cost of work-in-process inventory as of October 2023.
