Process vs Job Order
This costing system is used for mass-produced, homogeneous products.
What is a process cost system
In process costing, how many Work in Process accounts are typically used?
What is multiple—one for each department?
Equivalent units measure output in terms of this concept.
What is fully completed units?
This is the primary document used in a process cost system.
What is a production cost report?
True or False: Process costing is used for heterogeneous products.
What is False?
Soft drinks, paint, and breakfast cereal are most likely costed using this system.
What is process costing?
Direct materials added to multiple departments are recorded by debiting this.
What are the individual Work in Process accounts?
Under the weighted-average method, beginning WIP is treated how?
What is combined with current-period production?
How many steps are used to prepare a production cost report?
What are four steps?
This is the most common student error in equivalent units problems.
What is forgetting percentage completion?
This is the key difference in how costs are accumulated in process costing.
What is costs are accumulated by department or process
When goods move from one department to the next, this account is credited.
What is the transferring department’s Work in Process account?
Conversion costs consist of these two components.
What are direct labor and manufacturing overhead?
Step 1 of the production cost report focuses on this.
What is physical unit flow?
This cost is always included in conversion costs.
What is manufacturing overhead?
This feature exists in job order costing but NOT in process costing.
What are job cost sheets?
$50,000 of materials are added to Machining and $20,000 to Assembly.
What is the journal entry?
What is the journal entry?
Debit WIP—Machining $50,000; Debit WIP—Assembly $20,000; Credit Raw Materials $70,000
20,000 units completed; 5,000 units in ending WIP, 60% complete.
Compute equivalent units (materials added at beginning).
What are 23,000 equivalent units?
Materials cost = $450,000; equivalent units = 900,000.
What is unit materials cost?
What is $0.50 per unit?
This step ensures total costs are fully accounted for.
What is the cost reconciliation schedule?
In process costing, unit costs are computed at this point.
What is at the end of the period?
Units costing $87,000 are transferred from Machining to Assembly.
What entry is required?
What entry is required?
Debit WIP—Assembly $87,000; Credit WIP—Machining $87,000
15,000 units completed; 10,000 units in ending WIP at 30% conversion.
Materials added at beginning.
How many equivalent units for conversion?
What are 18,000 equivalent units?
2,500 units in ending WIP; materials 100% complete, conversion 40%.
Unit costs: materials $10, conversion $30.
Total ending WIP cost?
What is $55,000?
The first question you should ask before doing any process-costing math.
What is where are materials added?
In process costing, costs follow the __________, not the __________.
What are departments, not jobs?