Exam 5: Process Costing and Cost Allocation

Under FIFO,ending work-in-process inventory comes from units that were started but not fully completed during the current period.

Managerial accountants calculate product costs on a:

Clothes Manufacturing,Inc.manufactures clothes and distributes them to various buyers.This organization is unique because the managers reported identical costs per unit in the production and manufacturing operations.The managers also reported they use different quality of materials,and in different batches.What type of costing does the managerial accountant use at Clothes Manufacturing,Inc.?

What is the first step of process costing?

The costs incurred beyond the splitoff point that are assignable to each of the specific products identified at the splitoff point is known as:

Managerial accountants base their choice between the weighted-average method and the first-in,first-out method based on a desired effect on taxes,operating income,performance evaluation,and debt covenants.

In the incremental cost-allocation method,the third-ranked user is the second-incremental user and is allocated the additional cost that arises from only one user.

The process-costing method that assumes the earliest equivalent units in work in process are completed first is:

T-account entries posted in process-costing systems:

Managerial accountants record direct material costs and conversion costs in an assembly department as the costs are incurred.

________-cost allocation is arbitrary and mangers generally have a lot less discretion in choosing a method,unlike the choice of the weighted-average or FIFO method in process costing.

In the incremental-cost allocation method,the first-ranked user,or primary party,allocates costs up to the costs of the primary user as a stand-alone user.

________ -costing systems separate costs into cost categories according to when costs are introduced into the process.

Terry's Service Corporation reported the following data: Required: Compute the direct material cost per unit;the conversion cost per unit;and,the total department cost per unit.

The method that ranks the individual users of a costs object in the order of users most responsible for the common cost and uses the ranking to allocate costs among users is:

Managers use equivalent units to compare work done in categories and to measure work completed when they work with fully-assembled units and partially-assembled units.

The juncture in a joint-production process when two or more products become separately identifiable is known as:

Masses of identical or similar units of a product or service are in:

The incremental method is difficult because every user prefers to be viewed as an incremental party.

In the incremental-cost allocation method,the second-ranked user is the first-incremental user and is allocated the additional costs that arise from two users.