Questions Flashcards
What does one do with over applied or under applied overhead t the end of the period?
It is either closed out to cost of goods sold or allocated between accounts.
Closing out OverApplied overhead ______ COGS
Decreases. Since it is an overage in the applied account it would mean that the over cost would be lower now.
Closing out UnderApplied overhead ______ COGS
Increases. There was not enough funding applied to the account thus increasing the over cost.
What are the three differences between JOB ORDER COSTING and PROCESS COSTING
- Job order costing applies to unique production where process costing is used in the continuos flow of units.
- Material, labor and overhead Costs are accumulated to departments in Process Costing, not job cost sheets as in JOC
- process costing systems compute unit costs by department.
How are expenses handled for a service company?
All expenses of service companies are period costs because these companies do not have inventory.
What are the three types of inventory on a manufacturing company’s balance sheet?
RAW materials inventory, WIP inventory, Finished Goods Inventory
How does cost of goods sold differ for merchandising versus manufacturing companies?
The cost of goods sold for merchandising companies includes all costs of acquiring the merchandise; the cost of goods sold for manufacturing companies includes the three costs of manufacturing: direct materials, direct labor, and overhead.
A manufacturing statement (a) computes cost of goods manufactured for the period, (b) computes cost of goods sold for the period, or (c) reports operating expenses incurred for the period.
(a) computes cost of goods manufactured for the period
Are companies required to report a manufacturing statement?
No; companies rarely report a manufacturing statement.
How are both beginning and ending goods in process inventories reported on a manufacturing statement?
Beginning goods in process inventory is added to total manufacturing costs to yield total goods in process. Ending goods in process inventory is subtracted from total goods in process to yield cost of goods manufactured for the period.
