chapter 4 product and service costing time dependant (normal/interim/actual), (equivalence for process costing, and joint/byproduct for process costing)

Question 1

normal costing is from when?

Answer 1

before start of a job or before order is placed

Question 2

interim costing is from when?

Answer 2

after job completion and aims at ongoing cost and performance monitoring

Question 3

actual costing is from when to when?

Answer 3

after accounting period

Question 4

whats the points of normal costing

Answer 4

plan production program , negotiation, price policy planning

Question 5

whats the point of interim costing

Answer 5

cost and profit control, learn to respond to customer requests/needs

Question 6

point of actual costing

Answer 6

inventory valuation cost control profit control (but interim does control too)

Question 7

what is inventory valuation

Answer 7

monetarily find out how much your inventory is worth

Question 8

what does inventory valuation have to do with cost of goods sold (hence profit etc.)

Answer 8

you need to accurately find the value of inventory bc you can find cost of goods sold by the change in inventory (less inventory means you sold stuff)

actual costing is normal job costing that’s where you have the cost of stuff and the inventory valuation is also worth something

Question 9

normal costing future/past/current?

Answer 9

take past info only to predict planned costs

Question 10

interim costing, what type of direct cost added to what type of overhead

Answer 10

current actual direct cost
+
normal overhead (previous overhead rate(normal overhead rate) x actual real production time)

Question 11

what is actual overhead rate

Answer 11

actual overhead costs/ actual production time

Question 12

what is normal overhead rate

Answer 12

average overhead cost/ average production time

Question 13

what is planned overhead rates

Answer 13

planned overhead costs/ planned production time

Question 14

how would you do product costing using normal overhead rates

Answer 14

take average of overhead costs and average of production timme over last couple years and get a rate using those averages, then you have the production overhead (by doing the rate x the amount of produciton time it took)

Question 15

explain schematic flow of manufacturing costs

Answer 15

new inventory account is opened in general ledger recording DM, DL and overhead costs (based on normal overhead rates), then used as manufacturing costs, posted to finished gods inventory accounts, thenw hen its sold those costs transfer to COGS (part of P and L statement)

Question 16

when is equivalence number method used

Answer 16

related products produced using similair manufacturing equipment using similair raw materials (beer, screws)

Question 17

what is an assumption for equivalence number method

Answer 17

fixed relationship between related products, man cost of x/ man. cost of basic = equivalence number x / equivalence number basic

Question 18

how to find equivalence method

Answer 18

variant/basic type

Question 19

how do you get equivalent quanitty

Answer 19

multiply normal production quantity by the equivalence numer

Question 20

why do you need the equivalent quantities ?

Answer 20

you sum them up and use that number and divide by the total incurred cost to yout the manufacuring cost per unit for the basic type

Question 21

how do you find the total cost of the basic series ?

Answer 21

man. cost per unit by production quantity

Question 22

how do you find total cost of of other series type

Answer 22

take man.cost per unit of basic type and mulitpy by equivalence number to get man.cost per unit fo that series type

Question 23

explain the main product method

Answer 23

profits of byproducts are deducted form the total costs incurred before the decoupling point

so one main product and the rest are byproducts. profits of byproducts are deducted from the total costs incurred before decoupling point. remaining costs incurred before the decoupling point are then fully allocated to the main product

Question 24

explain the distribution method based on production times

Answer 24

allocation of cost incurred before decoupling point according to produced quantities or weight

Question 25

explain distribution method based on market values

Answer 25

allocation of costs incurred before decoupling point according to market value

Question 26

is interim costing the only one thats doesn’t always use the same type of direct cost and type of overhead?

Answer 26

yes

normal costing = only use planned DC and planned OH
actual costing = only use actual DC and actual OH

interim uses real DC and normal overhead (which is past normal oH rate x real production quantity) to get a feel for overhead, but since we don’t have overhead rate because we are still in the middle of the accounting year , we use the rate from previous things