Exam 12: Job-Order, process, and Hybrid Costing Systems

Which of the following is incorrect regarding a job-order costing system?

The weighted average method of process costing does not account for the state of completion of units in beginning inventory.

Equivalent units of production would best be defined as:

Indicate whether each of the following statements is true or false. A process costing system does not use the same inventory accounts as a job-order costing system.______ A process costing system accumulates product costs by jobs or batches of products.______ A company using a process costing system would keep a Work in Process account for each production department.______ In a process costing system,the cost of raw materials used is debited to Work in Process.______ A company using job-order costing must maintain a separate Work in Process account for each department.______

Why is the concept of equivalent units important for process costing?

Both job-order and process costing systems require cost averaging procedures.

A variety of organizations,products,and services are described in the following table: Product or Service Type of Cost System 1. Apple iPads 2. Ryan homebuilders 3. Chobani yogurt 4. Aamco auto repair 5. Shell Oil 6. Virgin America Airlines 7. Custom Motor Homes 8. Vitamin Water 9. R. M. Parrott, Orthodontist 10. Tylenol Required: In the second column of the above table,enter "Process" if a process costing system would be appropriate for the situation described or "Job-Order" if a job-order costing system would be more appropriate.

Indicate whether each of the following statements about process costing systems is true or false. The number of equivalent units can be calculated by the FIFO method or by the weighted average method.______ For Company X,the cost in beginning work in process was $18,000; costs incurred during the month were $52,100; the number of equivalent units for the month was 8,400.Company X calculates equivalent units by the weighted average method.The cost per equivalent unit was $6.20.______ The allocation of costs between products transferred out and those still in process at the end of the period is shown on a cost of production report.______ The weighted average method of calculating equivalent units takes into account the stage of completion of beginning work in process but not ending work in process.______ Many companies use the weighted average method to calculate equivalent units because the method is relatively easy to use.______

A materials requisition is sent to the purchasing agent by the materials storeroom clerk to request that additional materials be purchased.

Gaither Company uses a process costing system and the weighted average method.The following data applies to January. Units Beginning Work in Process 2,500 Started during the period 25,000 Ending Work in Process 1,000 The ending work in process inventory is 90% complete.The total number of equivalent units processed during January was:

The primary advantage of process costing systems is that there is no underapplied or overapplied overhead to account for.

Indicate whether each of the following statements is true or false. The purchase of raw materials for cash is an asset use transaction.______ Using raw materials in a job-order costing system increases work in process inventory.______ Wages paid to production workers are recorded as wages expense.______ When a company has finished making a product,it applies estimated manufacturing overhead costs to the product.______ A company might use machine hours to assign overhead costs to products if it has identified a cause-and-effect relationship between machine time and overhead costs.______

Company N manufactures machines to customer order.Why would the use of a process costing system not be appropriate for N?

Payment of cash for production department employee wages is an asset exchange transaction.

A materials requisition in a job-order costing system is used as a:

In which of the following industries would a job-order costing system most likely be used?

The purchase of raw materials for cash is:

Beta Company determined that its manufacturing overhead for the current accounting period was overapplied by $1,400.It closed the amount to cost of goods sold.The recognition of this transaction will:

Two methods of computing equivalent units are the LIFO and the weighted average methods.

Bruce Company experienced an event that affected its financial statements as indicated below: What type of product costing system is being used by this company?