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Exam 12: Job-Order, process, and Hybrid Costing Systems

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Question 21

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Steele Manufacturing Company reported the following Work in Process Inventory account activity measured in units.The ending inventory was estimated to be 70% complete. Beginning inventory 20,000 Started 90,000 Ending inventory 15,000 What is the number of equivalent units in Steele's ending work in process inventory?

A) 14,000
B) 15,000
C) 10,500
D) None of these answers are correct.

E) None of the above
F) B) and D)

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Question 22

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Gibbons Company uses a process costing system and the weighted average method.The company had 400 units of product in its work in process inventory at the beginning of the period.During the period 1,500 additional units of product were started.At the end of the period there were 750 units of product in the Work in Process account.The ending work in process inventory was estimated to be 30% complete.The beginning work in process inventory had a cost of $2,000.Product costs totaling $42,000 were added to work in process during the period.The number of equivalent units in ending work in process is:

A) 450.
B) 750.
C) 1,275.
D) 225.

E) B) and C)
F) All of the above

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Question 23

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Which of the following accounts is reported on the balance sheet?

Job-order and process costing systems are used only in the United States.

A process costing system and a job-order costing system both use a predetermined overhead rate to apply estimated manufacturing overhead costs to work in process.

Indicate whether each of the following statements about process costing systems is true or false. Process costing systems use the same general ledger accounts as job-ordering cost systems.______ Job-order costing systems accumulate product costs by departments.______ In a process costing system,as units are transferred from one processing department to another,their costs are transferred to finished goods inventory.______ In a process costing system,the movement of costs parallels the physical movement of products.______ In a process costing system,each batch has its own Work in Process account.______

For a company using a process costing system,as units are transferred from one department to the next,their costs are transferred along as well.

In a job-order costing system,as goods are produced,product costs (direct material,direct labor,and overhead) are accumulated in the:

O'Hare Company is a manufacturing firm that uses a job-order costing system to determine the costs of its products.During the current accounting period,O'Hare recognized depreciation of $600 on manufacturing equipment.Which of the following describes the effect of this event on the accounting equation?

Select the response from the list provided that best matches each of the following descriptions:

O'Hare Company is a manufacturing firm that uses a job-order costing system to determine the costs of its products.During the current accounting period,O'Hare applied estimated manufacturing overhead costs of $1,550 to Job #132.Which of the following statements regarding this transaction is correct?

Why does a company that uses a process costing system need to calculate equivalent units?

Which product costing system distributes costs evenly across total production?

Select the correct formula for computing the cost to be assigned to ending inventory in a process costing system.

Indicate whether each of the following statements about process costing systems is true or false. The use of a predetermined overhead rate is not required with process costing because the method calculates an average unit cost.______ When manufacturing overhead is applied to units of product,total assets do not change.______ For Morris Company,the cost per equivalent unit was $3.58.If the ending work in process was 8,000 units 85% complete,the total cost assigned to these units would be $28,640.______ A company with three processing departments generally would calculate a cost per equivalent unit for each department.______ With a process costing system,a company will not have to deal with underapplied or overapplied overhead.______

Indicate whether each of the following statements is true or false. Applying overhead costs to a job is an asset exchange transaction.______ The cost of finished goods in a job-order costing system includes the costs of direct materials,direct labor,and manufacturing overhead.______ When goods are completed,an entry is made to decrease the balance of the finished goods inventory.______ When a job is completed and transferred to finished goods,the job cost sheet accompanies the job.______ The payment of wages to production employees is recorded on the statement of cash flows as a cash flow for investing activities if the goods have not yet been sold.______

Langdon Company experienced an accounting event that affected its financial statements as indicated below: $\begin{array} { | c | c | c | c | c | c | c | c | c | c | } \hline \text { Assets } & = & \text { Liabilities } & + & \text { Equity } & \text { Revenue } & - & \text { Expense } & = & \text { Net income } \\\hline ( 250 ) & = & n / \mathrm { a } & + & ( 250 ) & \mathrm { n } / \mathrm { a } & - & 250 & = & ( 250 ) \\\hline\end{array}$ Which of the following transactions could have caused the indicated effects on the company's accounting equation?

Factory insurance is an indirect product cost and part of overhead.

Trenton Company is a manufacturing company with several processing departments.The company uses a process costing system.When goods are complete,the product cost transferred to finished goods inventory includes the sum of product costs from all the processing departments.

Jiminez Company engaged in the following transactions during May: 1.Purchased raw materials for cash,$400 2.Used raw materials to begin jobs,$284 3.Paid wages of production employees,$180 4.Applied overhead at rate of $1.25 per direct labor dollar 5.Completed job that had cost $320 6.Sold for $440 cash goods that had cost $295 to complete Required: Use the horizontal statements model provided to indicate how each of these events affected Jiminez's financial statements.Show dollar amounts of increases and decreases.If an item is not affected by a transaction,indicate by writing NA.