Chapter 5: Costing Systems Flashcards
Job-Order Costing and Overhead Application
How is overapplied/underapplied O/H assigned to inventories and COGS?
- The amount is determined on a pro-rata basis between WIP, Finished Goods and COGS
- The reported amount will be the original amount + the pro-rated amount
Job-Order Costing and Overhead Application
What is the calculation to determine Work-in-Process (WIP)?
Beginning WIP
Direct Materials Used
Direct Labor
Applied Overhead (usually based on a % of the cost driver)
Cost of Goods Manufactured
Ending WIP
Job-Order Costing and Overhead Application
What is the calculation to determine over/under applied O/H?
Actual O/H - Applied O/H
- Is the applied O/H < the Actual Overhead? Yes: Underapplied
- Is the applied O/H > the Actual Overhead? Yes: Underapplied
Job-Order Costing and Overhead Application
If the total manufacturing cost is based on a %, and the total amount is not available, what is the calculation to determine the amount needed?
The amount is calculated by dividing the allocated cost by the percentage
**Example: **
* Factory overhead was applied to production at a rate of 80% of direct labor cost, but DL is not included
* Total Manufacturing Cost amount given = 250,000
* Applied factory overhead was 30% of total manufacturing costs
* Applied Factory O/H = 250,000 x 30% = 750,000
* DL = 750,000 / .8 = 937,500
Job-Order Costing and Overhead Application
What are the journal entries for direct materials added and used in production?
Materials added to production:
(DR): Direct Materials Control
(CR): Accounts Payable
Materials used:
(DR): WIP Control
(CR): Direct Materials Control
Process Costing
What is the formula to calculate EUP based on the FIFO Inventory Method?
Beg. WIP x (1- Completion %)
(Beg. WIP)
Compelted
End. WIP x Completion %
- If direct materials are added at the beginning of the process, then the percentage will be 100%
- If conversion costs are added throughout the process, then the percentage will be based on what has been added for that period
Process Costing
Under the weighted-average method, how is EUP calculated when 100% of the direct materials are processed at the beginning?
- Beginning WIP will be included in the calculation
Beg. WIP x 100% DM Used
Completed
End. WIP x 100% DM Used
- When there is no Beginning WIP and Ending WIP is 100%, the EUP for DM will be the same number as the units placed in process
Process Costing
What is the calculation to determine the units started?
Beginning Work In Process + Units Started = Units Completed + Ending Work In Process
Process Costing
What is the calculation to determine the number of units placed in process?
Units in Ending WIP + Units transferred to Finished Goods (or completed)
Process Costing
What are the journal entry to record completion of goods?
(DR): Finished Goods Control
(CR): Work-In-Process Control
Process Costing
What is the calculation to determine conversion cost EUP when there is no beginning WIP?
The conversion cost units will be less than the units processed because of the % not yet completed that is reported in Ending WIP
Units that were Started and Completed
Ending WIP Units
(% of ending WIP that are not completed)
Process Costing
