Ch 4

Question 1

What is a processing department?

Answer 1

An organizational unit where work is performed on a product and where materials, labor, or overhead costs are added to the product

Question 2

What are three similarities between job-order costing and process costing?

Answer 2

1) Both systems have the same basic purposes of assigning material, labor, and manufacturing overhead
2) Both use the same basic manufacturing accounts
3) The flow of costs is almost the same

Question 3

What are three difference between job-order costing and process costing?

Answer 3

1) Process costing is used when a company produces different units that cant be distinguished for each other while job-order is used when a company produces many different jobs that have unique production requirements
2) Process costing there is no point in identifying materials, labor, and overhead costs
3) Process costing systems compute unit costs by department

Question 4

How do you calculate Equivalent Units?

Answer 4

= # of partially completed units x percentage completion

Question 5

Using the weighted average method, how do you calculate equivalent units?

Answer 5

= Units transferred to the next dept or to finished goods x Equivalent units in ending work in process inventory

Question 6

Using the weighted average method, how do you calculate the cost per equivalent unit?

Answer 6

= (cost of beg. work in process inv. + cost added during the period)/(Equivalent units of production)