Chapter 18: Q16RQ (page 1006)
What is the purpose of the Costs Accounted For section of the production cost report?
The production cost report is essential for the management because it contains vital information about the goods produced and the processing department's costs incurred in manufacturing the products.
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Refreshing Water Company produces premium bottled water. In the second department, the Bottling Department, conversion costs are incurred evenly throughout the bottling process, but packaging materials are not added until the end of the process. Costs in beginning Work-in-Process Inventory include transferred in costs of \(1,400, direct labor of \)700, and manufacturing overhead of \(330. March data for the Bottling Department follow:
REFRESHING WATER COMPANY WORK-IN-PROCESS INVENTORY – BOTTLING Month ended March 31,2018 | ||||||
| Dollars | ||||||
Units | Transferred in | Direct materials | Direct labor | Manufacturing overheads | Total costs | |
Beginning inventory, Mar. 1 (40% complete) | 15,000 | \)1,400 | \(700 | \)330 | \(2,430 | |
Production started | 160,000 | 135,100 | \)30,400 | 33,100 | 16,300 | 214,900 |
Transferred out | 152,000 | |||||
Ending inventory, Mar 31 (70% completed) | 23,000 | |||||
Requirements
1. Prepare a production cost report for the Bottling Department for the month of
March. The company uses the weighted-average method.
2. Prepare the journal entry to record the cost of units completed and transferred out.
3. Post all transactions to the Work-in-Process Inventory—Bottling T-account. What is the ending balance?
Question: What are the four steps in preparing a production cost report?
Question: The Mixing Department of Complete Foods had 62,000 units to account for in October. Of the 62,000 units, 38,000 units were completed and transferred to the next department, and 24,000 units were 20% complete. All of the materials are added at the beginning of the process. Conversion costs are added evenly throughout the mixing process and the company uses the weighted-average method.
Compute the total equivalent units of production for direct materials and
conversion costs for October.
Match each costing system characteristic to job order costing, process costing, or both.
1. Used by companies that manufacture identical items through a series of uniform production steps or processes
2. Transfers costs from Work-in-Process Inventory to Finished Goods Inventory to Cost of Goods Sold
3. Used by companies that manufacture unique products or provide specialized services
4. Has multiple Work-in-Process Inventory accounts
5. Tracks direct materials, direct labor, and manufacturing overhead costs
Question: What types of companies use job order costing systems?
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