CH 5

Question 1

What is “process costing”

Answer 1

Amount of produces wanting to sell = amount of consumers wanting to buy
–> A costing method used when homogeneous products are produced on a continuous basis

Question 2

What are “Processing departments” and what used for? (2 things)

Answer 2

–> Organizational unit where work is performed on a product AND where materials, labor or overhead costs are ADDED to the product

Question 3

What are “Processing departments” and what used for? (2 things)

Answer 3

–> Organizational unit where work is performed on a product AND where materials, labor or overhead costs are ADDED to the product

Question 4

3 processing departments in a potato chip factory?

Answer 4

1. potato prep’
2. cooking
3. inspecting and tracking

Question 4

3 processing departments in a potato chip factory?

Answer 4

1. potato prep’
2. cooking
3. inspecting and tracking

Question 5

A SEPARATE _______ is maintained for EACH processing depart.

Answer 5

a separate “Work in Process” account

Question 6

Once production is done in one depart, what is the transaction to go to the next one?

Answer 6

Debit WIP - Depart B
Credit WIP -Depart A

Question 7

What is the transaction to put a “labor cost” into a department?

Answer 7

Debit WIP - Depart A
Credit Salaries and Wages Payable

Question 8

Transaction for: M. overhead applied to Dep. A?

Answer 8

Debit WIP - Dep. A
Credit Manufacturing Overhead

Question 9

Operating Costing? Ex? What groups are they processed?

Answer 9

• In situations where products have some common characteristics and some individual charact.
  ○ Shoes for ex.
  –> Processed in “batches”

Question 10

Equivalent Units of Production? (equation)

Answer 10

Units transferred to the next department (or to finished goods) during the period + the equivalent units (completed goods) in the department’s ending work in process inventory.

Question 11

Cost per equivalent unit? (Equation)

Answer 11

(Cost of Beginning WIP inventory + Costs added in the period)/equivalent units of production

Question 12

The structure of a “Cost Reconciliation”?

Answer 12

Costs to be accounted for:
Cost of beginning WIP inventory
Costs added to production
Costs accounted for:
Costs of units completed + transferred out
Cost of ending WIP inventory
Total cost accounted for

Question 13

Direct labor + MO =

Answer 13

Conversion cost