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Chapter 16: 3QS (page 744)

For each of the following products and services, indicate whether it is more likely produced in a process operation (P) or a job order operation (J).

1. Beach toys

2. Concrete swimming pool

3. iPhones

4. Wedding reception

5. Custom suits

6. Juice

7. Tattoos

8. Guitar picks

Short Answer

Expert verified
  1. P
  2. J
  3. P
  4. J
  5. J
  6. P
  7. J
  8. P

Step by step solution

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01

Explanation of beach toys

Process operations refer to the manufacturing process in which there are multiple activities or processes involved in production. In the case of beach toys, manufacturing the toys involves multiple activities; hence it will be classified under process operation.

02

Explanation of concrete swimming pool

Job operation refers to the manufacturing process in which a product is manufactured by considering the requirement and specification of the customers.In the case of a concrete swimming pool, the making will vary as per the requirement of the customer; hence it will be related to job operation,

03

 Explanation of iPhones 

Manufacturing of iPhones requires multiple activities or processes like procurement of raw materials, processing, software part etc., hence will be treated as a process operation.

04

 Explanation of wedding receptions 

Wedding reception parties are planned as per the requirement of the customer, on which the total cost to be charged is based, hence it is part of job operation.

05

 Explanation of custom suits 

Custom suits are made as per the requirements or customizations of the customers; hence it is part of the job order operations.

06

 Explanation of juice 

Juice production requires multiple processes such as procurement of raw materials, sorting, processing or extraction of juice, filtrations and so on. Thus, it is a part of process operations.

07

 Explanation of tattoos 

Tattoos are made as per the requirements such as the type or design of the customers; hence it is a part of job operations.

08

 Explanation of guitar picks 

Guitar picks are manufactured with multiple activities, and are produced in large quantities; hence it is part of process operations.

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Most popular questions from this chapter

Question: During May, the production department of a process manufacturing system completed a number of units of a product and transferred them to finished goods. Of these transferred units, 62,500 were in process in the production department at the beginning of May and 175,000 were started and completed in May. May’s beginning inventory units were 40% complete with respect to materials and 80% complete with respect to conversion. At the end of May, 76,250 additional units were in process in the production department and were 80% complete with respect to materials and 20% complete with respect to conversion. The production department had \(683,750 of direct materials and \)446,050 of conversion cost charged to it during May. Its beginning inventory included \(99,075 of direct materials cost and \)53,493 of conversion cost.

  • 1.Compute the number of units transferred to finished goods.
  • 2.Compute the number of equivalent units with respect to both materials used and conversion used in the production department for May using the FIFO method.
  • 3.Compute the direct materials cost and the conversion cost per equivalent unit for the department.
  • 4.Using the FIFO method, assign May’s costs to the units transferred to finished goods and assign costs to its ending work in process inventory

A production department’s beginning inventory cost includes \(394,900 of conversion costs. This department incurs an additional \)907,500 in conversion costs in the month of March. Equivalent units of production for conversion total 740,000 for March. Calculate the cost per equivalent unit of conversion using the weighted-average method.

Are the journal entries that match cost flows to product flows in process costing primarily the same or much different than those in job order costing? Explain.

Major League Bat Company manufactures baseball bats. In addition to its work in process inventories, the company maintains inventories of raw materials and finished goods. It uses raw materials as direct materials in production and as indirect materials. Its factory payroll costs include direct labor for production and indirect labor. All materials are added at the beginning of the process, and conversion costs are applied uniformly throughout the production process.

Required

You are to maintain records and produce measures of inventories to reflect the July events of this company. Set up the following general ledger accounts and enter the June 30 balances: Raw Materials Inventory, \(25,000; Work in Process Inventory, \)8,135 (\(2,660 of direct materials and \)5,475 of conversion); Finished Goods Inventory, \(110,000; Sales, \)0; Cost of Goods Sold, \(0; Factory Wages Payable, \)0; and Factory Overhead, \(0.

  1. Prepare journal entries to record the following July transactions and events.
    1. Purchased raw materials for \)125,000 cash (the company uses a perpetual inventory system).
    2. Used raw materials as follows: direct materials, \(52,440; and indirect materials, \)10,000.
    3. Recorded factory wages payable costs as follows: direct labor, \(202,250; and indirect labor, \)25,000.
    4. Paid factory payroll cost of \(227,250 with cash (ignore taxes).
    5. Incurred additional factory overhead costs of \)80,000 paid in cash.
    6. Allocated factory overhead to production at 50% of direct labor costs.
  2. Information about the July inventories follows. Use this information with that from part 1 to prepare a process cost summary, assuming the weighted-average method is used.

Units

Beginning inventory

5,000 units

Started

14,000 units

Ending inventory

8,000 units

Beginning inventory

Materials—Percent complete

100%

Conversion—Percent complete

75%

Ending inventory

Materials—Percent complete

100%

Conversion—Percent complete

40%

3. Using the results from part 2 and the available information, make computations and prepare journal entries to record the following:

g. Total costs transferred to finished goods for July (label this entry g).

h. Sale of finished goods costing \(265,700 for \)625,000 in cash (label this entry h).

4. Post entries from parts 1 and 3 to the ledger accounts set up at the beginning of the problem.

5. Compute the amount of gross profit from the sales in July. (Note: Add any underapplied overhead to, or deduct any overapplied overhead from, the cost of goods sold. Ignore the corresponding journal entry.)

Prepare journal entries to record the following production activities.

1. Transferred completed goods from the Assembly department to finished goods inventory. The goods cost \(135,600.

2. Sold \)315,000 of goods on credit. Their cost is $175,000.
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