Podcast
Questions and Answers
In a normal cost system, when would a debit to Work in Process Inventory not be made?
In a normal cost system, when would a debit to Work in Process Inventory not be made?
- For applied overhead costs
- For actual direct labor costs
- For actual direct material costs
- For actual overhead costs (correct)
What measure is used to allocate costs in the pilot ABC project of Badian Inc.of Cebu Ltd.?
What measure is used to allocate costs in the pilot ABC project of Badian Inc.of Cebu Ltd.?
- # of employees
- # of receiving reports
- # of purchase orders
- # of telephone calls (correct)
Which activity in the Purchasing Department of Cebu Ltd. incurred the highest total cost?
Which activity in the Purchasing Department of Cebu Ltd. incurred the highest total cost?
- Reviewing receiving reports
- Reviewing purchase orders
- Finding best suppliers (correct)
- Issuing purchase orders
What was the total annual cost of the Purchasing Department at Badian Inc.of Cebu Ltd.?
What was the total annual cost of the Purchasing Department at Badian Inc.of Cebu Ltd.?
How many telephone calls were made by the purchasing department during the year?
How many telephone calls were made by the purchasing department during the year?
For one product at Badian Inc.of Cebu Ltd., how many purchase orders were issued?
For one product at Badian Inc.of Cebu Ltd., how many purchase orders were issued?
What were the original direct material costs incurred for Job 108?
What were the original direct material costs incurred for Job 108?
What is the total cost per finished unit of Job 108?
What is the total cost per finished unit of Job 108?
If the rework cost for 10 units attributed to internal failure or factory overhead is P 260, what is the cost per reworked unit?
If the rework cost for 10 units attributed to internal failure or factory overhead is P 260, what is the cost per reworked unit?
What would be the appropriate entry to close the accounts if P 29,000 overhead costs were incurred and P 25,000 were applied to jobs?
What would be the appropriate entry to close the accounts if P 29,000 overhead costs were incurred and P 25,000 were applied to jobs?
What is the total amount of factory overhead incurred for Job 108?
What is the total amount of factory overhead incurred for Job 108?
If the original direct labor cost was P 800 and factory overhead was calculated at 150% of direct labor, what was the total factory overhead cost?
If the original direct labor cost was P 800 and factory overhead was calculated at 150% of direct labor, what was the total factory overhead cost?
In a traditional costing system compared to an ABC system, what does the text suggest about unit costs for high-volume products?
In a traditional costing system compared to an ABC system, what does the text suggest about unit costs for high-volume products?
What is the formula for calculating applied overhead in the company's financial records?
What is the formula for calculating applied overhead in the company's financial records?
What is the carrying value of the company's work in process inventory at December 31 according to the information provided?
What is the carrying value of the company's work in process inventory at December 31 according to the information provided?
Which system does Q Company use based on the information provided in the text?
Which system does Q Company use based on the information provided in the text?
What type of products does Toma Nuptial Bakery specialize in making according to the text?
What type of products does Toma Nuptial Bakery specialize in making according to the text?
What is the Predetermined Overhead rate used by Q Company for allocating overhead costs?
What is the Predetermined Overhead rate used by Q Company for allocating overhead costs?
What is the total amount of direct labor incurred for all jobs by the end of July?
What is the total amount of direct labor incurred for all jobs by the end of July?
Which job had the highest number of direct labor hours by the end of July?
Which job had the highest number of direct labor hours by the end of July?
What was the total cost of direct materials for all jobs by July 31?
What was the total cost of direct materials for all jobs by July 31?
If Jobs 60 and 62 were completed and sold, what was the total revenue generated from these two jobs?
If Jobs 60 and 62 were completed and sold, what was the total revenue generated from these two jobs?
What is the total balance in Work in Process Inventory as of July 31?
What is the total balance in Work in Process Inventory as of July 31?
In cost accounting, what does product cost cross-subsidization mean?
In cost accounting, what does product cost cross-subsidization mean?
In an ABC system, what is treated differently compared to a traditional costing system?
In an ABC system, what is treated differently compared to a traditional costing system?
What is considered a more effective cost driver for allocating setup costs in Herbal Corp.?
What is considered a more effective cost driver for allocating setup costs in Herbal Corp.?
Under traditional costing, which pack is overcosted according to the cost information of Herbal Corp.?
Under traditional costing, which pack is overcosted according to the cost information of Herbal Corp.?
What are the fundamental cost objects of ABC system?
What are the fundamental cost objects of ABC system?
Which characteristic indicates a company would benefit from switching to ABC?
Which characteristic indicates a company would benefit from switching to ABC?
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Study Notes
Work in Process Inventory
- A debit to Work in Process Inventory is not made when direct material or labor is not used in job costing.
- Original direct material costs for Job 108 need to be specified for accurate job cost tracking.
Activity-Based Costing at Badian Inc.
- The pilot ABC project uses activity measures to allocate costs effectively.
- The Purchasing Department incurs the highest total costs, highlighting a key cost area.
Purchasing Department Costs
- Total annual costs of the Purchasing Department for Badian Inc. require specific figures.
- The department made a significant number of telephone calls, emphasizing its operational activity.
Job 108 Cost Details
- Total cost per finished unit of Job 108 must be documented for pricing strategies.
- Factory overhead for Job 108 needs to be calculated to determine total job costs.
- If rework costs for 10 units are P 260, cost per reworked unit is P 26.
Cost Allocation and Financial Records
- Factory overhead is applied at 150% of direct labor costs, providing a formula for applied overhead calculations.
- A P 29,000 overhead costs need proper journal entries for closing accounts, considering P 25,000 applied.
Direct Labor and Material Costs
- Total direct labor incurred for all jobs by the end of July gives insight into workforce utilization.
- Jobs 60 and 62 revenue must be calculated post-sale to assess profitability.
- The total cost of direct materials for all jobs until July 31 is essential for cost management.
Inventory and Cost Accounting
- Carrying value of work in process inventory at year-end is critical for financial reporting.
- The total balance in Work in Process Inventory on July 31 provides a snapshot of unfinished production.
Costing System Insights
- Product cost cross-subsidization indicates potential inaccuracies in cost allocation across products.
- In an ABC system, overhead allocation differs substantially from traditional costing methods, allowing for precision.
- ABC is more suited for companies with diverse products, reflected in their cost drivers for setup costs.
Business Characteristics and Cost Drivers
- Companies with various products and complex operations may benefit from switching to ABC.
- Overcosted products highlighted by traditional costing may lead to mispricing and reduced competitiveness.
Summary of Key Concepts
- The fundamental cost objects in an ABC system clarify where costs are allocated.
- A systematic approach to costing enhances decision-making and resource allocation in businesses.
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