Lecture 3

Question 1

whats Job-Order Costing and Process Costing

Answer 1

Job-Order Costing – The cost object is the individual job/order/unit. Focus is on the individual job/order/unit. (custom Art work)

Process Costing – The cost object is the entire process. Not a single unit but the whole period’s worth of work. Focus on the process as a whole. Lots of identical products. (thinking about average cost per unit) (eg bacth of regular pencils )

Question 2

whats Cost Object defintion

Answer 2

Cost Object – Something to which costs are being assigned / something that accumulates costs.

Question 3

Equivalent Units def

Answer 3

Equivalent Units – A way of measuring work on partially-completed units, measured as quantity of physical units times the percent of the way completed

Question 4

Physical Units def

Answer 4

Physical Units – An actual unit, even if only partially completed.

Question 5

What are Conversion Costs (CC)

Answer 5

Conversion Costs (CC) are the DL and MOH used to convert the RM to FG (finished goods). Happen throughout the period.

Question 6

Weighted Average Method

Answer 6

Under the Weighted Average method we don’t care if costs were added last period or this period. We combine them all together.

Add last period cost of beginning WIP to cost of this period

Allocate this total cost as of there were no beginning WIP

Question 7

Conversion costs

Answer 7

Labour + Over Head costs

Question 8

Cost per equivalent unit

Answer 8

DM:

DM total cost (Begining WIP cost + Present Cost) / Total equvalent units DM

CC:

CC total cost (Begining WIP cost + Present Cost) / Total equvalent units CC

Question 9

Predetermined MOH rate other name is ?

Answer 9

Budgeted OH rate

Question 10

Explain the accounting treatment necessary for the over- or under allocated amount

Answer 10

At the end of the year, the overallocated or underallocated manufacturing overhead for the
year is normally transferred to cost of goods sold in the income statement.