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Chapter 17: Q.17-3RQ (page 937)

Question: What types of companies use process costing systems?

Short Answer

Expert verified

Answer:

Soft drink companies, surfboard manufacturers, and medical equipment manufacturers use the process costinh system for computing the cost of production.

Step by step solution

01

Cost of goods sold

Cost of goods sold is computed by the company to know about the profit earned by the company on the goods produced and sold during the reporting period. It is shown in the income statement as a deduction from the gross revenue generated by the company.

02

Process costing system

Companies that produce similar products through a series of production steps or processes use the process costing system. Soft drink companies, medical equipment manufacturers, etc., use this process costing system.

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Most popular questions from this chapter

Question: Wesson Company is a consulting firm. The firm expects to have \(45,000 in indirect costs during the year and bill customers for 6,000 hours. The cost of direct labor is \)75 per hour.

16. Calculate the predetermined overhead allocation rate for Wesson using estimated billable hours for the allocation base.

17. Wesson completed a consulting job for George Peterson and billed the customer for 15 hours. What was the total cost of the consulting job?

18. If Wesson wants to earn a profit equal to 60% of the cost of a job, how much should the company charge Mr. Peterson?

Question: Why does the sale of a completed job require two journal entries? What are they?

Following is a list of cost system characteristics and sample companies. Match each to either job order costing or process costing.

h. A company that bottles milk into one-gallon containers.

Justice Company鈥檚 Manufacturing Overhead account is given below. Use this informationto prepare the journal entry to adjust for overallocated or underallocatedoverhead.

Manufacturing overhead

148000147000

Question: Match the following terms to their definitions.

a. A record used to assign direct labor cost to specific jobs. 1. Job

b. A document that requests the transfer of materials to 2. Job cost order

the production floor.

c. A document that shows the direct materials, direct labor, 3. Job order costing

and manufacturing overhead costs for an individual job.

d. An accounting system that accumulates costs by process. 4. Labor time record

e. The production of a unique product or specialized service 5. Material requisition

f. Used by companies that manufacture unique products or 6. Process costing system

provide specialized services
See all solutions

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