[GET] Process Costing Exam Questions And Answers
Why are the job costs different from those computed in Problem ? Iqbal, adapted The Zaf Radiator Company uses a normalcosting system with a single manufacturing overhead cost pool and machine-hours as the costallocation base. The following data are...
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Process Costing Joint and By Product CA Past Years Exam Question
The carts are produced in two departments, fabrication a mostly automated department and custom finishing a mostly manual department. The company uses a normal-costing system in which overhead in the fabrication department is allocated to jobs on the basis of machine-hours and overhead in the finishing department is allocated to jobs based on direct labor-hours. Calculate the amount of overhead allocated in the fabrication department and the finishing department in May. Calculate the amount of under- or overallocated overhead in each department and in total. How much of the under- or overallocated overhead will be prorated to a work in process inventory, b finished goods inventory, and c cost of goods sold based on the ending balance before proration in each of the three accounts?
MA Chapter 13 Questions Process Costing – Work-in-Progress
What will be the balance in work in process, finished goods, and cost of goods sold after proration? What would be the effect of writing off under- and overallocated overhead to cost of goods sold? Would it be reasonable for Premier Golf Carts to change to this simpler method? Sridhar, adapted Keezel Company uses normal costing in its job-costing system. What was the amount of direct materials issued to production during ? What was the amount of manufacturing overhead allocated to jobs during ? What was the total cost of jobs completed during ? What was the balance of work-in-process inventory on December 31, ? What was the cost of goods sold before proration of under- or overallocated overhead? What was the under- or overallocated manufacturing overhead in ? Dispose of the under- or overallocated manufacturing overhead using the following: a. Which approach in requirement 7 do you recommend Keezel use? Explain your answer briefly.
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Brandon Company uses normal costing in its job-costing system. The company produces custom bikes for toddlers. No direct materials were returned to suppliers. No units were started or completed on December 31 and no direct materials were requisitioned on December Prepare journal entries for the December 31 payroll. Use T-accounts to compute the following: a. The total amount of materials requisitioned into work in process during December b. The total amount of direct manufacturing labor recorded in work in process during December Hint: You have to solve requirements 2b and 2c simultaneously c. The total amount of manufacturing overhead recorded in work in process during December d.
Cost Accounting Basics: Top 15 Question & Answers (Updated)
Ending balance in work in process, December 31 e. Cost of goods sold for December before adjustments for under- or overallocated manufacturing overhead 3. Prepare closing journal entries related to manufacturing overhead. Assume that all underor overallocated manufacturing overhead is closed directly to Cost of Goods Sold. InStep Company prints custom training material for corporations. The business was started January 1, The company uses a normal-costing system. It has two direct cost pools, materials and labor, and one indirect cost pool, overhead. Overhead is charged to printing jobs on the basis of direct labor cost. The following information is available for Required: 1. Compute the overhead allocation rate. Calculate the balance in ending work in process and cost of goods sold before any adjustments for under- or overallocated overhead. Calculate under- or overallocated overhead.
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Calculate the ending balances in work in process and cost of goods sold if the under- or overallocated overhead amount is as follows: a. Written off to cost of goods sold b. Prorated using the overhead allocated in before proration in the ending balances of cost of goods sold and work-in-process control accounts 5. Which of the methods in requirement 4 would you choose? Job costing, ethics. Joseph Underwood joined Anderson Enterprises as controller in October Anderson Enterprises manufactures and installs home greenhouses.
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The company uses a normal-costing system with two direct-cost pools, direct materials and direct manufacturing labor, and one indirect-cost pool, manufacturing overhead. At the end of , an immaterial amount of underallocated overhead was closed out to cost of goods sold, and the company showed a small loss. He explains to the company president that, because overhead was underallocated in lOMoAR cPSD , this adjustment is necessary. Insert the given information in the T-accounts below. Calculate the following amounts to complete the T-accounts: a.
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Manufacturing overhead allocated, c. Cost of goods sold, 2. Calculate the amount of under- or overallocated manufacturing overhead. Under- or overallocated manufacturing overhead is written off to cost of goods sold. Under- or overallocated manufacturing overhead is prorated based on the ending balances in work in process, finished goods, and cost of goods sold. Underwood chooses option 3a above, stating that the amount is immaterial. Comment on the ethical implications of his choice. Do you think that there were any ethical issues when he established the manufacturing overhead rate for back in late ?
Ch.5 Process Costing - Questions Answers
Market Pulse performs market research for consumer product companies across the country. The company conducts telephone surveys and gathers consumers together in focus groups to review foods, cleaning products, and toiletries. Market Pulse uses a normal-costing system with one direct-cost pool, labor, and one indirect-cost pool, general overhead. Actual overhead equaled allocated overhead as of April 30, Calculate JIP at the end of May. Calculate CCJ for May.
Process Costing – Weighted Average Method
Calculate under- or overallocated overhead at the end of May. Written off to CCJ b. Which method would you choose? Would your choice depend on whether overhead cost is underallocated or overallocated?
Difficult questions on Process Costing
X Corporation uses the weighted-average method in its process costing system. The beginning inventory in the first processing department consisted of units. The costs and percentage completion of these units in beginning inventory during the month were: A total of 5, units were started and 4, units were transferred to the second processing department during the month. What are the equivalent units for conversion costs for the month in the first processing department? What is the cost per equivalent unit for materials for the month in the first processing department? What is the cost per equivalent unit for conversion costs for the first department? Answer: 5 d. What is the total cost of units transferred from the first processing department to the next processing department during the month? Answer: 6 e.
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What is the cost of ending work in process inventory in the first processing department according to the company's cost system? Answer: f.
Process costing system
What do you mean by Cost? Answer — Cost means the amount of expenditure incurred upon manufacturing of an article or providing any service. What do you understand by Costing? Answer — costing is the technique and process of ascertaining the cost. What is meant Cost Accounting? Answer — Cost accounting is the provision of such analysis and classification of the expenditure as will enable to ascertain the total cost of any particular unit of production. What is the opportunity cost or define opportunity cost? Answer — The value of the alternatives forgone by employing resources in a specific manner is known as opportunity cost. What is Absorption Costing? Answer — It is the technique to charge all fixed and variable expenses pertaining to product, process or job.
ACCA Management Accounting (MA) Practice Questions
Define uniform costing? Answer — It is the adoption of the uniform method of cost accounting by a number of units of the industry to ascertain cost. Differentiate between Cost and Costing? Answer — Cost means the amount of expenditure incurred upon manufacturing of an article for providing any service while Costing is the technique and process of ascertaining cost. Explain Cost Unit? Answer — Cost unit is a certified measurement of any goods or service like per ton, per km, per passenger km. What do you mean by Cost Centre? Answer — The cost center is a location, person or item of equipment which are connected with an understanding of which costs are ascertained. What is the difference between Cost Unit and Cost Centre? Answer — Cost unit is a unit of quantity of product, service in relation to cost ascertainment while cost center is related to the particular department, location, person or item of equipment etc.
Top 13 Process Costing Question & Answer (Cost Accounting) - Googlesir
It is an example of continuous operation costing. One of the distinguishing features of process costing is that all the products in a process are identical and indistinguishable from each other. For this reason, an average cost per unit is calculated for each process. Expected output is what we expect to get out of the process. Another main feature of process costing is that the output of one process forms the material input of the next process. Also, where there is closing work-in-progress WIP at the end of one period, this forms the opening WIP at the beginning of the next period. The details of process costs and units are recorded in a process account which shows in very general terms the materials , labour and overheads input to the process and the materials output at the end of the process. Process costing with losses and gains Normal losses Sometimes in a process, the total of the input units may differ from the total of the output units.
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Losses may occur due to the evaporation or wastage of materials and this may be an expected part of the process. Losses may sometimes be sold and generate a revenue which is generally referred to as scrap proceeds or scrap value. Normal loss is the loss that is expected in a process and it is often expressed as a percentage of the materials input to the process. When calculating the cost per unit, the normal loss is anticipated by using the expected good output in the formula: Normal loss and scrap value If normal loss is sold as scrap the revenue is used to reduce the input costs of the process. Abnormal losses and gains Normal loss is the expected loss in a process. Normal gain is the expected gain in a process. If the loss or the gain in a process is different to what we are expecting i. The costs of abnormal losses and gains are not absorbed into the cost of good output but are shown as losses and gains in the process account.
Ch. 5 Multiple Choice - Principles of Accounting, Volume 2: Managerial Accounting | OpenStax
Abnormal loss and gain units are valued at the same cost as units of good output. The process of calculation would thus be 1 Calculate any normal loss units forms part of the output units 2 By looking at actual output, determine whether there is an abnormal loss or gain. Work-in-progress WIP and equivalent units EUs WIP At the end of an accounting period there may be some units that have entered a production process but the process has not been completed. These units are called closing work in progress or WIP units. If we assume that there is no opening WIP, then the output at the end of a period will consist of the following: fully-processed units part-processed units closing WIP.
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It would not be fair to allocate a full unit cost to part-processed units and so we need to use the concept of equivalent units EUs which spreads out the process costs of a period fairly between the fully- processed and part-processed units. The idea behind this concept is that a part-processed unit can be expressed as a proportion of a fully-completed unit. For example, if units are exactly half-way through the production process, they are effectively equal to 50 fully-completed units. Therefore the part-processed units can be regarded as being equivalent to 50 fully-completed units or 50 EUs. Different degrees of completion For most processes the material is input at the start of the process, so it is only the addition of labour and overheads that will be incomplete at the end of the period.
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This means that the material cost should be spread over all units, but conversion costs should be spread over the EUs. This can be achieved using an expanded Statement of EUs which separates out the materials and labour costs. Note that the term conversion costs is often used to describe the addition of labour and overheads together in a process. Opening work in progress Until now, we have assumed that there has been no opening WIP. In reality, this is unlikely to be the case Work remaining in process WIP and transfers out of a process fully-completed units can be valued on different bases: weighted average method and the FIFO method.
Top 5 Problems on Process Costing (With Solution)
These methods are similar to the valuation methods studied when we looked at materials in an earlier chapter. Weighted average costing of production In the weighted average method opening inventory values are added to current costs to provide an overall average cost per unit. No distinction is made between units in process at the start of a period and those added during the period.
Cost Accounting Knowledge Test
FIFO costing of production In the weighted average method opening inventory values are added to current costs to provide an overall average cost per unit. This means that the process costs in the period must be allocated between: opening WIP units units started and completed in the period fully-worked units closing WIP units. Losses made part way through production It is possible that losses or gains could be identified part way through a process. In such a case, EUs must be used to assess the extent to which costs were incurred at the time at which the loss was identified. Further complications Some processes produce more than one output. Depending on the relative importance of these products they may be known as joint or by products , a classification that affects the costing treatment.
Costing MCQ Questions and Solutions with Explanations | Commerce
Following the partition of Ireland and the independence of the Irish Free State in , which left Northern Ireland as the only part of the island of Ireland within the United Kingdom, the name was changed to the "United Kingdom of Great Britain and Northern Ireland". After conquering England , they seized large parts of Wales , conquered much of Ireland and were invited to settle in Scotland , bringing to each country feudalism on the Northern French model and Norman-French culture. Asserting its independence in the Declaration of Arbroath , Scotland maintained its independence thereafter, albeit in near-constant conflict with England. The English monarchs, through inheritance of substantial territories in France and claims to the French crown, were also heavily involved in conflicts in France, most notably the Hundred Years War , while the Kings of Scots were in an alliance with the French during this period.
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George's , Bermuda. Settled in , the town is the oldest continuously-inhabited English town in the New World. Although the monarchy was restored , the Interregnum along with the Glorious Revolution of and the subsequent Bill of Rights , and the Claim of Right Act ensured that, unlike much of the rest of Europe, royal absolutism would not prevail, and a professed Catholic could never accede to the throne. The British constitution would develop on the basis of constitutional monarchy and the parliamentary system. During this period, particularly in England, the development of naval power and the interest in voyages of discovery led to the acquisition and settlement of overseas colonies , particularly in North America and the Caribbean. On 1 May , the Kingdom of Great Britain was formed, the result of Acts of Union being passed by the parliaments of England and Scotland to ratify the Treaty of Union and so unite the two kingdoms. The Jacobites were finally defeated at the Battle of Culloden in , after which the Scottish Highlanders were brutally suppressed.
Process costing exam questions and answers pdf
British imperial ambition turned towards Asia, particularly to India. The world's oldest international human rights organisation, Anti-Slavery International , was formed in London in Alongside the formal control it exerted over its own colonies, British dominance of much of world trade meant that it effectively controlled the economies of many regions , such as Asia and Latin America. During the century, the population increased at a dramatic rate, accompanied by rapid urbanisation, causing significant social and economic stresses. Canada, Australia and New Zealand became self-governing dominions. The Labour Party emerged from an alliance of trade unions and small socialist groups in , and suffragettes campaigned from before for women's right to vote.
Process costing exam questions and answers pdf. Process Costing
More than , British soldiers died on the battlefields of the First World War. After the war, Britain received the League of Nations mandate over a number of former German and Ottoman colonies. The British Empire reached its greatest extent, covering a fifth of the world's land surface and a quarter of its population. Northern Ireland remained part of the United Kingdom. A wave of strikes in the mids culminated in the General Strike of Britain had still not recovered from the effects of the war when the Great Depression — occurred. This led to considerable unemployment and hardship in the old industrial areas, as well as political and social unrest in the s, with rising membership in communist and socialist parties. A coalition government was formed in Winston Churchill became prime minister and head of a coalition government in Despite the defeat of its European allies in the first year of the war, Britain and its Empire continued the fight alone against Germany.
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