BEC 3 - Cost Accting 2

  1. What items are included in a cost of good manufactured statement?
    • Accounts for the manufacturing costs of the products completed during the period. Includes
    • Direct Materials
    • Direct Labor
    • Manufacturing Overhead
  2. What does a typical COG Manufactured Statement contain?
    • WIP inventory, beginning
    • Add, DM used, DL, Manu-OH applied
    • Total manufacturing costs available
    • (Less, WIP inventory, ending)
    • COG Manufactured
  3. What items are collected on the Production Report
    • The total costs incurred for a period
    • The units (aka quantities) produced during that period
  4. What are the steps required to complete process costing?
    • Summarize the flow of physical units beginning with the production report
    • Calculate "equivalent unit" output
    • Accumulate the total costs to be accounted for (production report)
    • Calculate the avg cost/unit based on total costs and equivalent units
    • Apply the avg cost/unit to the completed and remaining WIP inventory
  5. Company X put 10,000 units into production during the 1st quarter. Raw material was input at the beginning of production. Conversion costs were 75% complete during the first 2 months, the remainder to be complete during the 3rd month. What are the equivalent units at the end of February?
    • 100% complete for raw materials = 10,000 units
    • 75% complete for conversion = 7,500 units
  6. What are the 4 process costing assumptions
    • (1) transfers in are 100% complete from the previous process
    • (2) DM added at the beginning of the process is 100% complete
    • (3) DM added during the process is "partially complete" depending on how much work has been done
    • (4) DM added at the very end of the process will not be included in ending WIP inventory (0% complete)
  7. Which of the following bears an observable and known relationship to a quantifiable activity base: (1) fixed cost, (2) engineered cost, (3) target cost, (4) indirect cost.
    • Engineered costs
    • These include direct labor and direct materials as these can be directly linked to output
  8. Describe traditional overhead costing. What is another name for this method?
    • aka Volume-based costing
    • All indirect manufacturing overhead costs are placed into a single cost pool. This cost pool is then allocated using a single cost driver (such as direct labor hours or machine hours).
  9. Since overhead is allocated based on the budgeted rate, what happens when the actual overhead is > applied overhead
    • = Underapplied overhead (a debit balance)
    • Means actual is more than budgeted (an unfavorable position)
  10. What does it mean when the Manufacturing Overhead account has a credit balance?
    • More overhead has been allocated than was budgeted
    • Actual costs < applied costs
    • Meaning costs are less than budget = favorable
  11. For indirect materials, provide a flow of the following in the order used: (1) factory overhead control, (2) stores control, (3) WIP control, (4) factory overhead applied
    • Stores control
    • Factory overhead control
    • Factory overhead applied
    • WIP Control
  12. What is the difference (definition) between (1) total manufacturing cost, and (2) cost of goods manufactured?
    • Total manufacturing costs are the costs to create products and includes DL, OH, and DM. Some of these remain unfinished in WIP.
    • Cost of Goods Manufactured at the finished products that transfer to finished goods inventory and are ready for sale.
  13. Product costs are not expensed until [this happens].
    The products are sold.
  14. Describe the two methods of calculating average unit costs.
    • FIFO: Assume the beginning inventory was completed first and is assigned the initial costs.
    • Weighted Average: Averages the cost of production during the period with the costs in the beginning WIP inventory.
  15. What are the 3 elements that compose calculating the equivalent units using the FIFO method? What are the cost components?
    • UNITS
    • Beginning WIP x % to be completed
    • Add, units started and completed during the period (= completed - started)
    • Add, ending WIP x % completed
    • COSTS
    • (current costs incurred during the period) / equivalent units
  16. What are the 2 elements that compose calculating the equivalent units using the weighted avg method? What are the cost components?
    • UNITS
    • Units completed (beginning WIP + units started and completed --> beginning WIP is not adjusted for % to be completed)
    • Add, ending WIP x % completed.
    • COSTS
    • (costs of beginning inventory + current costs incurred during the period) / equivalent units
  17. What accounts for the difference in equivalent units comparing FIFO to the Wt Avg method? Which method has fewer equivalent units?
    • In FIFO we account for the partially completed beginning WIP inventory
    • For Wt Avg the beginning units are included in the completed products amount.
    • Thus FIFO will always have fewer equivalent units than Wt Avg.
  18. ABC Co incurs abnormal spoilage due to a power outage. How is this abnormal spoilage accounted?
    As a period expense, not a production expense
  19. Since overhead is allocated based on the budgeted rate, what happens when the actual overhead is < applied overhead
    • = Overapplied overhead (a credit balance)
    • Means actual is less than budgeted (an favorable position)
  20. For process costing, costs are accumulated based on (1) activities, (2) operations, (3) job, or (4) department
    (4) department
Author
BethM
ID
331473
Card Set
BEC 3 - Cost Accting 2
Description
Becker Review
Updated