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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

Question: Explain the terms to account for and accounted for.

Question: What are the primary differences between job order costing systems and process costing systems?

Refer to the data and your answers from Exercise E18-23.

Requirements

1. Prepare the journal entries to record the assignment of direct materials and direct labor and the allocation of manufacturing overhead to the Fermenting Department. Assume labor costs are accrued and not yet paid. Also prepare the journal entry to record the cost of the gallons completed and transferred out to the Packaging Department.

2. Post the journal entries to the Work-in-Process Inventory—Fermenting T-account. What is the ending balance?

3. What is the average cost per gallon transferred out of the Fermenting Department into the Packaging Department? Why would Shea Winery’s managers want to know this cost?

Question: Castillo Company has three departments: Mixing, Bottling, and Packaging. At the end of the month, the production cost reports for the departments show the costs of the products completed and transferred were \(75,000 from Mixing to Bottling, \)50,000 from Bottling to Packaging, and $65,000 from Packaging to Finished Goods Inventory. Prepare the journal entries for the transfer of the costs.

Question: Spring Fresh produces premium bottled water. Spring Fresh purchases artesian water, stores the water in large tanks, and then runs the water through two processes: filtration and bottling.

During February, the filtration process incurred the following costs in processing

200,000 liters:

Wages of workers operating filtration equipment

$19,950

Manufacturing overhead allocated to filtration

20,050

Water

110,000

Spring Fresh had no beginning Work-in-Process Inventory in the Filtration Department in February and uses the weighted-average method.

Requirements

1. Compute the February conversion costs in the Filtration Department.

2. The Filtration Department completely processed 200,000 liters in February. What was the filtration cost per liter?
See all solutions

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