Exam 2: Measuring Product Costs

Job costs in a service organization.Adams and Associates,a CPA firm,uses job costing.During January,the firm provided audit services for two clients and billed those clients for the services performed.Paxton Productions was billed for 4,000 hours at $140 per hour,and Young Industries in was billed for 2,000 hours at $140 per hour.Direct labor costs were $75 per hour.Of the 6,400 hours worked in January,400 hours were not billable.The firm assigns overhead to jobs at the rate of $25 per billable hour.During January,the firm incurred actual overhead of $155,000.The firm incurred marketing and administrative costs of $35,000.All transactions were on account. Required: a.Show how Adams and Associates' accounting system would record these revenues and costs using journal entries. b.Prepare an income statement for January like the one in Exhibit 2.5 in the text. (Adams and Associates;job costs in a service organization. )

Use this information to answer the following question(s): Refer to the above information;determine the amount of materials purchased during the period.

Using the following information,calculate equivalent units of production for XYZ Company using the FIFO method: Beginning Inventory: 50,000 units,70% complete Units started & completed: 100,000 units Units in ending inventory: 25,000 units,40% complete

Describe the similarities among and the differences between product costing in service organizations and manufacturing companies.

What costing method should a manufacturing company use when it produces batches of products where the value and quality of direct material varies by batch,but the direct labor and time spent are standardized?

Explain the components of JIT production methods.Discuss how accountants adapt costing systems to these components.

Describe various production methods and the different accounting systems each requires.

Which statement is true concerning job costing?

Which of the following is a deficiency of process costing?

Computing equivalent units (Appendix 2.1).The Assembly Department had 80,000 units 65 percent complete in Work-in-Process Inventory at the beginning of April.During April,the department started and completed 150,000 units.The department started another 42,000 units and completed 25 percent as of the end of April. Required: Compute the equivalent units of work performed during April using FIFO.

Which of the following costing system is appropriate for a company that mass-produces homogeneous products (continuous flow processing)?

Safa Visual Works,Inc.estimated its overhead costs for the current year to be as follows: fixed,$175,000;variable,$4 per unit.Safa expected to produce 350,000 units during the year.During the year,the company incurred overhead costs of $1,600,000 and produced 400,000 units.Calculate the rate to be used to apply manufacturing overhead costs to products.

Which statement is true concerning just-in-time inventory systems?

Fisher Products Company The Fisher Products Company uses a job costing system.The company estimated its annual overhead to be $100,000,and the number of direct labor hours for the year to be 20,000 hours.In the first month,the following jobs were completed: Refer to the Fisher Products Company.What is the total manufacturing cost of job #115?

Different types of companies use different types of cost systems.An effective cost system must have all of the following characteristics except:

What can be said of the relationship between total manufacturing costs and the cost of goods manufactured when work-in-process inventories decrease during the period? (Assume no change in per unit costs. )

Identify ethical issues in job costing.

Which of the following is true regarding waste and spoilage?

Explain the need for recording costs by department and assigning costs to products.

Actual costing does notuse which of the following to measures product costs?