AC505 Week2quiz

Topics: Inventory, Manufacturing, Costs Pages: 6 (974 words) Published: January 31, 2015

(TCO F) For which situation(s) below would an organization be more likely to use a job-order costing system of accumulating product costs rather than a process costing system?

 
Student Answer:
a steel factory that processes iron ore into steel bars
 

a factory that processes sugar and other ingredients into black licorice  

a costume maker that makes specialty costumes for figure skaters  

all of these

 
Comments:

 2.
Question :
(TCO F) Process costing would be appropriate for each of the following except:

 
Student Answer:
custom furniture manufacturing.
 

oil refining.
 

grain milling.
 

newsprint production.

 
Comments:

 3.
Question :
(TCO F) Lucas Company uses the weighted-average method in its process costing system. The company adds materials at the beginning of the process in the Forming Department, which is the first of two stages in its production process. Information concerning operations in the Forming Department in October follows:

 

What were the materials cost of work in process at October 31?

 
Student Answer:
$3,060
 

$5,520
 

$6,000
 

$6,120

(TCO F) Some companies use process costing and some use job-order costing. Which method a company uses depends on its industry. A number of companies in different industries are listed below:

 i. Specialty coffee roaster (roasts small batches of specialty coffee beans)  ii. Custom aircraft builder
 iii. Brick manufacturer
 iv. Microbrewery that produces a number of different beers  v. Steel company making chain link fences from iron ore

 Required:

For each company, indicate whether the company is most likely to use job-order costing or process costing.

 
Student Answer:
 
Specialty coffee roaster - job order costing Custom aircraft builder- process costing Brick manufacturer would consider Process costing Microbrewery that produces a number of different beers i would say Process costing Steel company making chain link fences from iron ore i would say Job order costing.

 
Comments:

 2.
Question :
(TCO F) Job 484 was recently completed. The following data have been recorded on its job cost sheet:

 

The company applies manufacturing overhead on the basis of direct labor-hours. The predetermined overhead rate is $24 per direct labor-hour.

Required: Compute the unit product cost that would appear on the job cost sheet for this job.

 
Student Answer:
 

 
Comments:

 3.
Question :
(TCO F) Alake Company is a manufacturing firm that uses job-order costing. At the beginning of the year, the company's inventory balances were as follows:

 

The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that it would work 36,000 machine-hours and incur $216,000 in manufacturing overhead cost. The following transactions were recorded for the year:

i. Raw materials were purchased, $443,000.
ii. Raw materials were requisitioned for use in production, $450,000 ($435,000 direct and $15,000 indirect). iii. The following employee costs were incurred: direct labor, $229,000; indirect labor, $54,000; and administrative salaries, $117,000. iv. Selling costs, $119,000.

v. Factory utility costs, $21,000.
vi. Depreciation for the year was $121,000 of which $114,000 is related to factory operations and $7,000 is related to selling, general, and administrative activities. vii. Manufacturing overhead was applied to jobs. The actual level of activity for the year was 38,000 machine-hours. viii. The cost of goods manufactured for the year was $910,000. xiv. Sales for the year totaled $1,173,000 and the costs on the job cost sheets of the goods that were sold totaled $895,000. xv. The balance in the Manufacturing Overhead account was closed out to Cost of Goods Sold.

Required: Prepare the appropriate journal entry for...
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