Week 2: Preparation of manufacturing accounts, job order costing (|)

Question 1

Textbook chapters and pages

Answer 1

ch2 pages 17 and onwards, ch 3 up to accumulation costs)

Question 2

Activity index

Answer 2

The activity that causes changes in the behaviour of costs.

Question 3

Relevant range

Answer 3

The range of the activity index over which the company expects to operate during the year.

Question 4

2 principal differences in fin statements of merchandisers and manufacturers

Answer 4

1) The current assets section of the balance sheet.
2) The cost of goods sold section in the income statement.

Question 5

Differences in the balance sheets

Answer 5

• for merchandisers there is only one inventory account (goods available for sale)
• for manufacturers there are 3:
  1) raw materials
  2) work in progress
  3) finished goods (goods available for sale)

Question 6

COGS section of the income statement difference

Answer 6

In the periodic inventory system:
- For Merchandisers:
= Beg. Merchandise Inventory + COG Purchased - Ending Merchandise Inventory = COGS
- For Manufacturers:
= Beg. Finished Goods Inventory + COG Manufactured - Ending Finished Goods inventory = COGS

Question 7

Maintenance costs =

Answer 7

Fixed costs + Variable costs

Question 8

Regression analysis

Answer 8

is a statistical approach that estimates the cost formula by employing information from all data points, not just the highest and lowest ones.

Question 9

pros of regression analysis

Answer 9

1) minimizes cumulative data from all the points (close to all, but not exact; whereas high low is 2 exact data points and some very off)
2) can provide a cost formula more representative of the relationship between km driven and maintenance costs

Question 10

cons of regression analysis

Answer 10

1) only works if the relationship is linear
2) highly influenced by outliers and can be become misleading
3) requires a lot of data to be accurate which can time consuming, expensive, or not possible

Question 11

what are partially completed units called

Answer 11

beginning work in process inventory

Question 12

total cost of work in process inventory

Answer 12

beginning work in process inventory + total manufacturing costs

Question 13

COG Manufactured

Answer 13

total cost of work in process inventory - ending work in process inventory

Question 14

COG Manufactured Schedule

Answer 14

reports cost elements used in calculating cost of goods manufactured.

Question 15

Start of ch 3

Answer 15

at cost accounting

Question 16

cost accounting

Answer 16

focuses on the measuring, recording, and reporting of product costs.

Question 17

A cost accounting system consists of

Answer 17

accounts for the various manufacturing costs.

Question 18

2 basic types of cost accounting systems

Answer 18

1) job order system
2) process cost system