Chapter 4 Solution Managerial Accounting 9th. Ronald W Hilton
CHAPTER 4 PROBLEMS
Q(4-1): Explain the primary difference between job-order and process costing ?
Job-order costing * Costs accumulated by the job. * Work in process has a job-cost sheet for each job. * Many unique, high cost jobs. * Jobs built to customer order.
Process costing * Costs accumulated by department or process. * Work in process has a production report for each batch of products. * A few identical, low cost products. * Units continuously produced for inventory in automated process
Q(4-4): What are the purpose of a product-costing system? The purpose of a product-costing system: * Determine product and service cost, and value inventory. * Facilitate management planning, cost. * Control and performance evaluation. * Facilitate managerial decision making.
Q(4-5): define the term equivalent units and explain how the concept is used in process costing.?
A term used in process costing to refer to the amount of manufacturing activity that has been applied to a batch of physical unites .1000 physical units in process represent 750 equivalent units of conversation activity .
After materials, labor and overhead costs have been accumulated in a department, the department's output must be determined so that unit cost can be computed. A department usually has some partially completed units in its ending inventory. It does not seem reasonable to count these partially completed units as equivalent to fully completed units when counting the department's out put. These partially converted units are mathematically converted into an equivalent number of fully completed units. In process costing this is done by using the following formula:
Equivalent Units = Number of partially Completed Units × Percentage of Completion
Process Costing - Equivalent Units of Production
Ex: if 1000 units are in Work-In-Process at the end of the period and are considered 80% complete, the
Q(4-1): Explain the primary difference between job-order and process costing ?
Job-order costing * Costs accumulated by the job. * Work in process has a job-cost sheet for each job. * Many unique, high cost jobs. * Jobs built to customer order.
Process costing * Costs accumulated by department or process. * Work in process has a production report for each batch of products. * A few identical, low cost products. * Units continuously produced for inventory in automated process
Q(4-4): What are the purpose of a product-costing system? The purpose of a product-costing system: * Determine product and service cost, and value inventory. * Facilitate management planning, cost. * Control and performance evaluation. * Facilitate managerial decision making.
Q(4-5): define the term equivalent units and explain how the concept is used in process costing.?
A term used in process costing to refer to the amount of manufacturing activity that has been applied to a batch of physical unites .1000 physical units in process represent 750 equivalent units of conversation activity .
After materials, labor and overhead costs have been accumulated in a department, the department's output must be determined so that unit cost can be computed. A department usually has some partially completed units in its ending inventory. It does not seem reasonable to count these partially completed units as equivalent to fully completed units when counting the department's out put. These partially converted units are mathematically converted into an equivalent number of fully completed units. In process costing this is done by using the following formula:
Equivalent Units = Number of partially Completed Units × Percentage of Completion
Process Costing - Equivalent Units of Production
Ex: if 1000 units are in Work-In-Process at the end of the period and are considered 80% complete, the