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

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Question 51

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Why is calculating the cost of services provided to customers important for a service business?

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Question 52

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Frank Company experienced an event that affected its financial statements as indicated below: $\begin{array}{|c|c|c|c|c|c|c|c|c|c|}\hline \text { Assets } & = & \text { Liab. } & + & \text { Equity } & \text { Rev. } & - & \text { Exp. } & = & \text { Net Inc. } \\\hline 5,000 & = & \mathrm{n} / \mathrm{a} & + & 5,000 & 5,000 & - & \mathrm{n} / \mathrm{a} & = & 5,000 \\\hline\end{array}$ Which of the following transactions caused the indicated effects?

A) Completed units were sold.
B) Units were completed and moved to finished goods.
C) The cost of units sold was recorded.
D) None of these.

E) B) and C)
F) A) and B)

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Question 53

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The weighted average method of process costing does not account for the state of completion of units in beginning inventory.

Indicate whether each of the following statements is

Brown Company engaged in the following transactions during May 2014.Indicate whether each is an asset source (AS),asset use (AU),or asset exchange (AE)transaction. Purchased raw materials for cash,$42,000 Used raw materials to begin jobs,$28,400 Paid wages of production employees,$18,000 Applied overhead at rate of $1.25 per direct labor dollar Completed job that had cost $32,000 Sold goods for $44,000 cash The goods referred to in the transaction above had cost $29,500 to complete

O'Hare Company,is a manufacturing firm that uses a job-order cost system to determine the costs of its products.O'Hare Company sold job #132,that cost $5,900 to manufacture,for $8,200 cash.The job cost sheet for that job reported total manufacturing costs of $5,900.The recognition of this event on the financial statements would include a(n) :

A process cost system uses just two inventory accounts,raw materials inventoryRaw Materials Inventory and work in process inventoryWork in Process Inventory.

An iIndirect material:

For the month of November 2014,Department B completed and transferred to the next department 5,000 units of product.Department B's ending work in process was 3,000 units that were 10 percent complete.The following cost information is available for the period: $\begin{array}{|l|r|}\hline \text { Cost transferred in } & \$ 35,000 \\\hline \text { Cost of beginning work in process } & 3,600 \\\hline \text { Direct materials } & 17,000 \\\hline \text { Direct labor } & 9,000 \\\hline \text { Manufacturing overhead } & 12,000 \\\hline\end{array}$ Required: (A)Determine the cost per equivalent whole unit for the month of November.(Round your answer to three decimal places. ) (B)Determine the cost transferred out during the month. (C)Calculate the cost assigned to the ending work in process at the end of the month.(Round your answer to the nearest dollar. )

The primary advantage of process cost systems is that there is no underapplied or over-or-underapplied overhead manufacturing overhead to account for.

The entry to record the completion of a job in a job costing system would cause:

Marion Company uses process costing and the weighted average method.The following information was available for April: $\begin{array}{|l|r|l|}\hline & {\text { Units }} & \text { Costs } \\\hline \text { Work in Process, April 1 } & 100 & \$ 3,000 \\\hline \text { Work in Process, April 30 } & 200 & (\mathrm{~A}) \\\hline\end{array}$ During April,1,000 units were started,and costs incurred during the month were $37,000.Ending inventory was 50% complete.Based on the information given, (A) above would equal what amount?

An example of a product or /service that would most likely be accounted for using a process cost system would be:

Generally accepted accounting principles (GAAP)prohibit the use of a hybrid cost system.

Garst Manufacturing is working on two jobs.Cost is accumulated under a job order cost system,and overhead is applied on the basis of direct labor hours.The company estimated that overhead would be $64,000 and 10,000 direct labor hours would be worked.Both projects were started and completed in the current accounting period.The following transactions were completed during the period: (a) Used $10,000 of direct material on Project I and $6,800 of direct material on Project II. (b) Labor costs for the two jobs amounted to the following: Project I,$24,000 (2,000 hours) ;Project II,$44,000 (6,000 hours) . (c) Project II was sold during the period for $120,000. The ending balance in work in process was:

All of the following are source documents used in job order cost systems except:

Process costing is used for products produced in mass quantities through a continuous process that provides similar inputs to each unit produced.

What source documents would be used in preparing a job cost sheet?

A company that uses a process cost system would calculate the cost per equivalent unit and then use that amount to allocate costs between the goods transferred out and the beginning work in process inventory.

In 2014During the current accounting period,O'Hare Company paid $2,300 for selling and administrative expenses.Payment of cash for selling and administrative expenses is: