Managerial Flashcards
Chapter 20
What is an example of a type of business that would use a process cost system?
Candy maker, oil refinery, paint manufacturer
What types of companies would not use a process cost system?
Auto repair service, specialty printer, custom furniture manufacturer
How are process and job order cost systems similar?
Both accumulate product costs to units produced, both maintain perpetual inventories, both allocate product cost to units produced
In a process cost system, the cost of completed production in Dept C is transferred to Dept. D by what entry?
Debit WIP - Dept C, Credit WIP Dept. D
What are characteristics of a process cost system?
Manufacturing costs are grouped by departments, the system may use several work-in-process accounts, the system allocates costs between completed and partially completed units within a department
If a company uses a process costing system to account for the costs in its five production departments, how many WIP will it use?
5
In the manufacture of 10,000 units of a product, direct materials cost incurred was $265,000, direct labor cost incurred was $145,000 and applied factory overhead was $153,500. What is the total conversion cost?
$298,500
Equivalent Units
The portion of whole units that were completed with respect to either materials or conversion costs within a given accounting period
What is not included in conversion costs?
Direct materials
What is not a use of the cost of production report?
To help production
Just in time processing is a business philosophy that focuses on reducing time and cost and eliminating poor quality. This is accomplished in manufacturing and non-manufacturing processes by
combining processing functions into work centers and cross-training workers to perform more than one function
What best describes the effect on direct labor when management adopts a just-in-time environment?
Workers are often cross trained to perform more than one funciton
