Chapter 18: Q24RQ (page 1006)
When might it be beneficial for a company to use the FIFO method? When is the weighted-average method more practical?
The FIFO method is beneficial when the cost changes significantly, and the weighted average method is beneficial when the cost is not changing significantly.
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What is the purpose of the Costs Accounted For section of the production cost report?
Complete the missing amounts and labels in the T-accounts.
Work-in-process inventory – Cutting
Balance, May 1 | 0 | Transferred out to | (A) |
Direct materials | 57,000 | ||
Direct labor | 5,000 | ||
Manufacturing overhead | 39,000 | ||
Balance, May 31 | 16,000 |
Work-in-process inventory – Finishing
Balance, May 1 | 11,000 | Transferred out to | 80,000 |
Transferred in from | (B) | ||
Direct materials | 21,000 | ||
Direct labor | (C ) | ||
Manufacturing overhead | 18,000 | ||
Balance, May 31 | 68,000 |
Work-in-process inventory – Packaging
Balance, May 1 | 4,000 | Transferred out to | (D) |
Transferred in from | (E ) | ||
Direct material | 1,000 | ||
Direct labor | 9,000 | ||
Manufacturing overhead | 14,000 | ||
Balance, May 31 | 8,000 |
Finished goods inventory
Balance, May 1 | 0 | Transferred out to | (F) |
Transferred in from | (G) | ||
Balance, May 31 | 2,000 |
Cost of goods sold
Balance, May 1 | 0 | ||
Transferred in from | (H) | ||
Balance, May 31 | (I) |
Question: Identify each costing system characteristic as job order costing or process costing.
a. One Work-in-Process Inventory account
b. Production cost reports
c. Cost accumulated by process
d. Job cost sheets
e. Manufactures homogenous products through a series of uniform steps
f. Multiple Work-in-Process Inventory accounts
g. Costs transferred at end of period
h. Manufactures batches of unique products or provides specialized services
Question: What types of companies use job order costing systems?
Question: Refer to Short Exercises S18-8 and S18-9. Use Complete Foods’s costs per equivalent unit of production for direct materials and conversion costs that you calculated in Short Exercise S18-9.
Calculate the cost of the 38,000 units completed and transferred out and the
24,000 units, 20% complete, in the ending Work-in-Process Inventory.
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