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Chapter 18: Q1TI (page 966)

Match each costing system characteristic to job order costing, process costing, or both.

1. Used by companies that manufacture identical items through a series of uniform production steps or processes

2. Transfers costs from Work-in-Process Inventory to Finished Goods Inventory to Cost of Goods Sold

3. Used by companies that manufacture unique products or provide specialized services

4. Has multiple Work-in-Process Inventory accounts

5. Tracks direct materials, direct labor, and manufacturing overhead costs

Short Answer

Expert verified

S.No.

Particulars

Classification

1.

Used by companies that manufacture identical items through a series of uniform production steps or processes

Process costing

2.

Transfers costs from Work-in-Process Inventory to Finished Goods Inventory to Cost of Goods Sold.

Both

3.

Used by companies that manufacture unique products or provide specialized services

Job order costing

4

Has multiple Work-in-Process Inventory accounts

Process costing

5

Tracks direct materials, direct labor, and manufacturing overhead costs

Both

Step by step solution

01

Costing system

The costing system explains the method to calculate the cost of manufacturing the products. The system provides two different methods to calculate the costing, i.e., the job order costing system and the process costing system.

02

Classification of costing system when the company manufactures identical items through a series of uniform production steps

Process costing system is used by the companies that manufacture similar products in large quantities by following a series of uniform manufacturing procedures. Hence, it is classified as the process costing system.

03

Classification of costing system when company transfers cost from work in process to finished goods inventory to cost of goods sold

In both costing systems, the company transfers the cost from the work in process account to the finished goods account and from the finished goods account to the cost of goods sold account. It is the normal flow of cost of manufacturing from one account to another.

04

Classification of costing system when the company manufactures unique products or provides specialized services

The job order costing system is used by companies engaged in manufacturing the specialized product in small quantities on the order of the client or as per the specification of the customers. Hence, the company manufacturesunique productsthat provide specialized services using the job order costing system.

05

Classification of costing system when a company has multiple works in process accounts

In process costing only, the product is manufactured by passing through multiple numbers of processes. Hence, the company hasmultiple work-in-process accountsthat use a process costing system.

06

Classification of costing system when company manufacture track direct material, direct labor, and manufacturing overhead cost.

The company tracks the direct material cost, direct labor cost, and manufacturing overhead under both systems. It is so because both systemsare used to calculate the total cost of manufacturing the products. Hence, it is classified in both (process costing and the job order costing system),

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Most popular questions from this chapter

Blue Ridge Mountain Manufacturing had the following transactions related to manufacturing overhead for the year:

1. Incurred manufacturing overhead costs

a. \(5,000 in indirect materials

b. \)12,500 in indirect labor (credit Wages Payable)

c. \(30,600 in machinery depreciation

d. \)20,400 in other indirect costs that were paid in cash

2. Allocated manufacturing overhead (use a compound entry)

a. \(30,000 to the Mixing Department

b. \)37,000 to the Packaging Department

Requirements

1. Prepare the journal entries for Blue Ridge Mountain Manufacturing.

2. Determine the amount of overallocated or underallocated manufacturing overhead by posting the transactions to the Manufacturing Overhead account. Assume the balance in Manufacturing Overhead on January 1 is $0. Prepare the adjusting entry.

The Packaging Department started the month with 600 units in process, received 1,200 units from the Finishing Department, and transferred 1,500 units to Finished Goods. Direct materials are added at the beginning of the process and conversion costs are incurred evenly. The units still in process at the end of the month are 60% complete for conversion costs. Calculate the number of units still in process at the end of the month and the equivalent units of production. The company uses the weighted-average method.

Describe the three groups of units that must be accounted for when using the FIFO method.

Preparing a production cost report, second department, withbeginning WIP and transferred in costs; journal entries; FIFO method Work Problem P18-40B using the FIFO method. The Mixing Department beginningwork in process of 400 units is 80% complete as to both direct materials and conversion costs. Round equivalent unit costs to four decimal places. Round all other costs to the nearest dollar.

Question: Spring Fresh produces premium bottled water. Spring Fresh purchases artesian water, stores the water in large tanks, and then runs the water through two processes: filtration and bottling.

During February, the filtration process incurred the following costs in processing

200,000 liters:

Wages of workers operating filtration equipment

$19,950

Manufacturing overhead allocated to filtration

20,050

Water

110,000

Spring Fresh had no beginning Work-in-Process Inventory in the Filtration Department in February and uses the weighted-average method.

Requirements

1. Compute the February conversion costs in the Filtration Department.

2. The Filtration Department completely processed 200,000 liters in February. What was the filtration cost per liter?
See all solutions

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