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Chapter 18: Q4RQ (page 1005)

Question: List ways in which job order costing systems are similar to process costing systems.

Short Answer

Expert verified

Answer:

The similarity of process costing and the job order costing system:

  1. Both system of costing have same goal of determing the product cost of direct material, direct labor and manufacturing overhead.
  2. Direct material, direct labor and manufacturing overhead are assigned to work in process inventory in each costing system.
  3. Both the system use predetermined overhead rates to apply the manufacturing overhead.

Step by step solution

01

Costing system

The costing system is used by the companies to determine the overall costing of the manufactured product.

02

The objective of job order costing system and the process costing is similar

The objective of both job order costing system and the process costing system is to determine the product cost of direct material, direct labor and manufacturing overhead through the three inventory account i.e. the WIP inventory account, finished goods inventory account and raw material account.

The production cost is assigned to the WIP inventory account and both the system compute the predetermined overhead rate for allocation of manufacturing overhead.

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Most popular questions from this chapter

Carla Carpet manufactures broadloom carpet in seven processes: spinning, dyeing, plying, spooling, tufting, latexing, and shearing. In the Dyeing Department, direct materials (dye) are added at the beginning of the process. Conversion costs are incurred evenly throughout the process. Information for November 2018 follows:

UNITS

Beginning work-in-process inventory

70 rolls

Transferred in from spinning department during November

550 rolls

Completed during November

480 rolls

Ending work in process inventory (80% complete for conversion work)

140 rolls

COSTS

Beginning work in process inventory (transferred in costs, \(4,000, Materials costs, \)1,400 conversion costs, \(5,300)

\)10,700

Transferred in from the spinning department

23,280

Material costs added during November

14,100

Coversion cost added during November (manufacturing wages, \(8,725; manufacturing overhead allocated, \)43,991)

52,716

Requirements

1. Prepare the November production cost report for Carla’s Dyeing Department.

The company uses the weighted-average method.

2. Journalize all transactions affecting Carla’s Dyeing Department during November, including the entries that have already been posted. Assume labor costs are accrued and not yet paid.

Question: Mayhem Electronics makes game consoles in three processes: assembly, programming, and packaging. Direct materials are added at the beginning of the assembly process. Conversion costs are incurred evenly throughout the process. The Assembly Department had no Work-in-Process Inventory on March 31. In mid-April, Mayhem Electronics started production on 99,000 game consoles. Of this number, 95,000 game consoles were assembled during April and transferred out to the Programming Department. The April 30 Work-in-Process Inventory in the Assembly Department was 45% of the way through the assembly process. Direct materials costing \(301,950 were placed in production in Assembly during April, direct labor of \)100,960 was assigned, and manufacturing overhead of $136,200 was allocated to that department.

Requirements

1. Prepare a production cost report for the Assembly Department for April. The

company uses the weighted-average method.

2. Prepare a T-account for Work-in-Process Inventory—Assembly to show its activity during April, including the April 30 balance.

Blue Ridge Mountain Manufacturing had the following transactions related to manufacturing overhead for the year:

1. Incurred manufacturing overhead costs

a. \(5,000 in indirect materials

b. \)12,500 in indirect labor (credit Wages Payable)

c. \(30,600 in machinery depreciation

d. \)20,400 in other indirect costs that were paid in cash

2. Allocated manufacturing overhead (use a compound entry)

a. \(30,000 to the Mixing Department

b. \)37,000 to the Packaging Department

Requirements

1. Prepare the journal entries for Blue Ridge Mountain Manufacturing.

2. Determine the amount of overallocated or underallocated manufacturing overhead by posting the transactions to the Manufacturing Overhead account. Assume the balance in Manufacturing Overhead on January 1 is $0. Prepare the adjusting entry.

Preparing a production cost report, second department, withbeginning WIP and transferred in costs; journal entries; FIFO method Work Problem P18-40B using the FIFO method. The Mixing Department beginningwork in process of 400 units is 80% complete as to both direct materials and conversion costs. Round equivalent unit costs to four decimal places. Round all other costs to the nearest dollar.

Question: Explain the terms to account for and accounted for.
See all solutions

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