Chapter 4 Solutions Managerial Accounting 12e Garrison Noreen Brewer
Chapter 4
Systems Design: Process Costing
Solutions to Questions
4-1
A process costing system should be used in situations where a homogeneous product is produced on a continuous basis.
ished goods) during the period plus the equivalent units in the department’s ending work in process inventory.
4-2
1. Job-order costing and process costing have the same basic purposes—to assign materials, labor, and overhead cost to products and to provide a mechanism for computing unit product costs.
2. Both systems use the same basic manufacturing accounts.
3. Costs flow through the accounts in basically the same way in both systems.
4-8
The company will want to distinguish between the costs of the metals used to make the medallions, but the medals are otherwise identical and go through the same production processes. Thus, operation costing is ideally suited for the company’s needs.
4-3
Cost accumulation is simpler under process costing because costs only need to be assigned to departments—not separate jobs. A company usually has a small number of processing departments, whereas a job-order costing system often must keep track of the costs of hundreds or even thousands of jobs.
4-4
In a process costing system, a Work in
Process account is maintained for each separate processing department.
4-5
The journal entry would be:
Work in Process, Firing ........ XXXX
Work in Process, Mixing .
XXXX
4-6
The costs that might be added in the
Firing Department include: (1) costs transferred in from the Mixing Department; (2) materials costs added in the Firing Department; (3) labor costs added in the Firing Department; and (4) overhead costs added in the Firing Department.
4-7
Under the weighted-average method, equivalent units of production consist of units transferred to the next department (or to fin-
4-9
Under the weighted-average method, each unit transferred out of the department is counted as one equivalent unit—regardless of in what period the work was done to complete the
Systems Design: Process Costing
Solutions to Questions
4-1
A process costing system should be used in situations where a homogeneous product is produced on a continuous basis.
ished goods) during the period plus the equivalent units in the department’s ending work in process inventory.
4-2
1. Job-order costing and process costing have the same basic purposes—to assign materials, labor, and overhead cost to products and to provide a mechanism for computing unit product costs.
2. Both systems use the same basic manufacturing accounts.
3. Costs flow through the accounts in basically the same way in both systems.
4-8
The company will want to distinguish between the costs of the metals used to make the medallions, but the medals are otherwise identical and go through the same production processes. Thus, operation costing is ideally suited for the company’s needs.
4-3
Cost accumulation is simpler under process costing because costs only need to be assigned to departments—not separate jobs. A company usually has a small number of processing departments, whereas a job-order costing system often must keep track of the costs of hundreds or even thousands of jobs.
4-4
In a process costing system, a Work in
Process account is maintained for each separate processing department.
4-5
The journal entry would be:
Work in Process, Firing ........ XXXX
Work in Process, Mixing .
XXXX
4-6
The costs that might be added in the
Firing Department include: (1) costs transferred in from the Mixing Department; (2) materials costs added in the Firing Department; (3) labor costs added in the Firing Department; and (4) overhead costs added in the Firing Department.
4-7
Under the weighted-average method, equivalent units of production consist of units transferred to the next department (or to fin-
4-9
Under the weighted-average method, each unit transferred out of the department is counted as one equivalent unit—regardless of in what period the work was done to complete the