Exam 7: Job and Process Costing Systems

In job costing, direct materials are traced to the job while direct labour and manufacturing overhead are allocated to the job.

Percentage of completion for work in process units is subject to judgement.

When using the FIFO method of process costing, the cost per equivalent unit is calculated by current period costs / equivalent units for work performed this period.

The journal entry to record overhead allocated is debit Work in Process and credit Overhead Control.

In process costing it is possible to split conversion costs into:

Which of the following is a fixed cost:

Cost of sales is shown in the statement of financial position.

On 1^st June, Drabadore Ltd had 40,000 units in process, which were 30% completed. Materials are added at the beginning of the process. During the month 320,000 units were started and 340,000 completed. Ending work in process was 50% complete. By what amount would the equivalent units of materials differ if weighted average were used instead of FIFO?

Inventory is reported at cost in the statement of financial position.

Under a job costing system the total cost of all the incomplete jobs recorded in the subsidiary ledger is reconciled to the:

Which type of company would be most likely use a process costing system?

Abnormal spoilage costs generally appear in the external financial accounts:

The assignment of overhead to individual jobs requires information about each job's use of the allocation base.

In process costing direct materials are traced to products while direct labour and overhead are allocated.

Selling and administrative costs are indirect costs that are included in the inventoriable product cost.

An allocation base is chosen for each department in job costing.

When products are sold the cost is:

Estimated production overhead in the machining department is $200,000 and actual overhead is $204,000 and estimated machine hours in the machining department are 4,000 hours and actual machine hours are 3,700 hours. Job 12B used 20 machine hours. Using normal costing what is the machining department overhead charged to job 12B?

Under applied overhead occurs when actual costs are less than the amount of overhead allocated.

In which order do the following activities take place for job costing: I For each overhead cost pool, calculate an overhead allocation rate. II Identify the relevant cost object. III Identify one or more overhead cost pools and allocation bases. IV For each overhead cost pool, allocate costs to the cost object.