Acct 505 Quiz 1 Week 2

1. Question : (TCO F) For which situation(s) below would an organization be more likely to use a job-order costing system of accumulating product costs rather than a process costing system? Student Answer: A steel factory that processes iron ore into steel bars A factory that processes sugar and other ingredients into black licorice A costume maker that makes specialty costumes for figure skaters All of these Instructor Explanation: Chapter 3 Question 2. Question : (TCO F) Process costing would be appropriate for each of the following except: Student Answer: custom furniture manufacturing. oil refining. grain milling. newsprint production. Instructor Explanation: Chapter 4 Question 3. Question : (TCO F) Unizat Corporation uses the weighted-average method in its process costing system. The following information pertains to one of the company's processing departments for a recent month: Units Material Cost Beginning work in process 30,000 $22,000 Started during the month 80,000 $72,000 Units completed 85,000 Ending work in process 25,000 Student Answer: Instructor All materials are added at the beginning of the process. The cost per equivalent unit for materials is closest to: $0.86 $0.90 $1.10 $1.18 Explanation: To solve for ending work in process: + Work in process, beginning 30,000 + Units started into production during the month 80,000 - Units completed and transferred out during the month 85,000 = Work in process, ending 25,000 Equivalent Units of Production Materials Transferred to next department 85,000 Ending work in process (conversion: 25,000 units x 10% complete) 25,000 Equivalent units of production 110,000 Cost per Equivalent Unit Conversion Cost of beginning work in process $22,000 Cost added during the period 72,000 Total cost (a) $94,000 Equivalent units of production (b) 110,000 Cost per equivalent unit (a) / (b) $0.85 Question 4. Question : (TCO F) The journal entry to record the incurrence of indirect labor costs is: Student Answer: a Wages Payable XXX Manufacturing Overhead XXX b Work In Process XXX Wages Payable XXX c Manufacturing Overhead XXX Wages Payable XXX d Wages Payable XXX Work in Process XXX Instructor Explanation: Chapter 3 Question 5. Question : (TCO F) During October, Crusan Corporation incurred $62,000 of direct labor costs and $4,000 of indirect labor costs. The journal entry to record the accrual of these wages would include a: Student Answer: debit to Work in Process of $66,000. credit to Work in Process of $66,000. debit to Work in Process of $62,000. credit to Work in Process of $62,000.