Chapter 4

Question 1

1st Similarity between Job-Order and Process Costing?

Answer 1

Both systems assign material, labour, and overhead costs to products and they provide a mechanism for computing unit product costs

Question 2

2nd Similarity between Job-Order and Process Costing?

Answer 2

Both systems use the same manufacturing accounts, including Manufacturing Overhead, Raw Materials, Work in Process, and Finished Goods.

Question 3

3rd Similarity between Job-Order and Process Costing?

Answer 3

The flow of costs through the manufacturing accounts is basically the same in both systems.

Question 4

1st Difference between Job-Order and Process Costing?

Answer 4

Process costing is used when a single product is produced on a continuing basis or for a long period of time. Job-order costing is used when many different jobs having different production requirements are worked on each period.

Question 5

2nd Difference between Job-Order and Process Costing?

Answer 5

Process costing systems accumulate costs by department. Job-order costing systems accumulated costs by individual jobs.

Question 6

3rd Difference between Job-Order and Process Costing?

Answer 6

Process costing systems use department production reports to accumulate costs. Job-order costing systems use job cost sheets to accumulate costs.

Question 7

4th Difference between Job-Order and Process Costing?

Answer 7

Process costing systems compute unit costs by department. Job- order costing systems compute unit costs by job on the job cost sheet.

Question 8

What are Processing Departments?

Answer 8

Any unit in an organization where materials, labour, or overhead are added to the product.

Question 9

What are Equivalent Units?

Answer 9

are the product of the number of partially completed units and the percentage

Question 10

How many ways can we calculate Equivalent units?

Answer 10

The First-In, First-Out Method AND The Weighted-Average Method

Question 11

Weighted‐Average Method (1st Tip)

Answer 11

Makes no distinction between work done in prior or current periods.

Question 12

Weighted‐Average Method (2nd Tip)

Answer 12

Blends together units and costs from prior and current periods.

Question 13

Weighted‐Average Method (3rd Tip)

Answer 13

Determines equivalent units of production for a department by adding together the number of units transferred out plus the equivalent units in ending work in process inventory.

Question 14

Equivalent units of production always equals:

Answer 14

Units completed and transferred + Equivalent units remaining in work in process

Question 15

Operation Costing

Answer 15

Operation costing is a hybrid of job-order and process costing because it possesses attributes of both approaches.

Question 16

When is Operation costing used?

Answer 16

Operation costing is commonly used when batches of many different products pass through the same processing department.

Question 17

What is Under Applied Overhead?

Answer 17

predetermined overhead rate is less than the total amount of overhead actually incurred

Question 18

What is Over Applied Overhead?

Answer 18

predetermined overhead rate is greater than the total amount of overhead actually incurred

Question 19

What is “Close to COGS” ?

Answer 19

When we debit excess Manufacturing Overhead to COGS, essentially making MO $0

Question 20

Allocating excess applied overhead procedure?

Answer 20

Allocate the imbalanced costs that we can directly trace to WIP, Finished Goods or COGS.