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Cost Systems
Just-In-Time plus one
Period/Product
Allocation
A little bit of everything...
100
What account(s) sgould always have a zero balance at the end of each accounting period?
Manufacturing Overhead
100
True or False: JIT does not have a Finished Goods account
False
100
What is a product cost? List three product cost.
Cost used to produce the product. depreciation on production equipment direct labor direct material Manufacturing overhead Factory depreciation *If it goes into the product itself its a product cost!
100
What is the predetermined overhead allocation rate equation?
Predetermined Overhead rate= Estimated overhead costs/ estimated total units in the allocation base
100
What does cost of goods sold describe?
the cost of goods that were completed during the period
200
The Cutting Department has 6,000 units in process at the end of September that are 100% complete for direct materials. The units are 70% complete for direct labor and manufacturing overhead which is added uniformly. What are the equivalent units of production for conversion costs?
4,200 units
200
Using a JIT system, to record the purchase of raw materials on account, the debit entry would be to?
Raw and In-Process Inventory
200
What is a period cost? List three.
Selling and Administration costs, everything outside the product. Anything at corporate headquarters, anything related to selling the product, shipping costs, administrative salaries, executive salaries, administrative office expenses, sales commissions, advertising, research and development, etc.
200
What is happening when underallocation of overhead occurs?
allocated overhead costs are less then actual costs
200
The maximum cost to develop, produce, and deliver a product or service to earn a desired profit is known as what?
Target Cost
300
What is the purpose of using a cost system?
To accumulate product cost information
300
Using a JIT system, to record the amount incurred for direct labor and overhead, the debit entry would be to what?
Conversion Costs
300
What best describes what office rent is to a manufacturing company?
Period Cost
300
Davie, Inc. used estimated direct labor hours of 320,000 and estimated manufacturing overhead costs of $1,150,000 in establishing its predetermined overhead allocation rate for the year. Actual results showed the following: Actual manufacturing overhead $850,000 Allocated manufacturing overhead $900,000 What was the number of direct labor hours worked during the year?
250,969 hours
300
When goods are transferred from the Work-In-Process Inventory account to Finished goods described what happens to assets of the company
Total assets remains constant
400
True of false: An accounting firm would likely use a process costing system.
False An accounting firm would likely use a job order system.
400
True or False: JIT Management main focus is to maintain low inventory surplus
True
400
True or False: Cost of finished goods that a manufacturer sells becomes cost of good sold on an income statement.
True
400
What is the journal entry when an adjustment of overallocation is needed?
MOH XXXX Cost of Goods sold XXXX
400
Jones Company manufactures chairs. Assume the following information:                  1.Manufacturing overhead is allocated based on machine hours. 2.Manufacturing overhead is estimated to be $120,000 and machines hours are expected to be 20,000 hours. 3.The actual manufacturing overhead is $111,000 and there are 18,000 actual machine hours. How much manufacturing overhead would Jones Company allocate?
$108,000
500
What is the difference between a process costing system and job order costing system
Process: More identical products are being produced. Assumption can be made that the cost of each unit is the same of another unit. Job Order: Often used when a variety of products or services are available.
500
At the beginning of the year, LKJ, Inc.'s Work-in-Process Inventory account had a balance of $114,000. During the year, $227,000 of direct materials were used in production, and $70,000 of direct labor costs were incurred. Manufacturing overhead amounted to $816,000. The cost of goods manufactured was $658,000. What is the balance in the Work-in-Process Inventory account on December 31?
$569,000
500
How would factory depreciation be described?
Product cost; expensed when the manufactured product is sold.
500
For a technology company, the most suitable base for allocating research and development costs to the finished product would be? a) cost of raw materials b) number of set ups c) direct labor hours d) number of new patents filed
d. the number of new patents filed
500
How is desired target cost calculated?
selling price * desired gross profit margin