Chapter 4

Question 1

Which costing system is more costly to use?

Answer 1

Job Order Cost System

Question 2

Job Order and Process Cost system similarities

Answer 2

Accumulation of materials, labor and OH to inventory is the same

Question 3

Job Order and Process Cost system differences

Answer 3

• the methods of assigning the costs to individual units of inventory differ significantly
• in Process Costing, Materials, Labor and OH are added in multiple departments
• in Process Costing, you must have a WIP account for each department

Question 4

Cost/Unit

Answer 4

Cost/Unit= (DM+DL+OH Applied)/Units produced

Question 5

Equivalent Units

Answer 5

Partially completed units are translated into the finished units in order to assign cost to inventories

Question 6

Production Cost Report

Answer 6

• Process Costing equivalent of the Job Cost Sheet
• an internal document for management
• shows production quantity and cost data for a department
• provides basis for evaluating productivity and cost control of each department, setting prices, etc.

Question 7

Weighted Average Method

Answer 7

• Calculate average cost/EU
• average all costs (beginning and current) over all EU
• most widely used method

Question 8

6 Steps to Preparing Cost Report:

Answer 8

1. Account for the Physical Flow of Units
2. Accumulate Costs
3. Calculate EU
4. Calculate Cost per EU
5. Value Inventories
6. Cost Reconciliation