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ACCT 1B Lecture Notes - Lecture 4: Perpetual Inventory, Cost Accounting, Subledger

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amethysthyena724
16 Jun 2020
School
Irvine Valley College
Department
Accounting
Course
ACCT 1B
Professor
Seilo

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Document Summary

Job order cost accounting: describe cost systems and the flow of costs in a job order system. Cost accounting: measuring, recording and reporting of product costs. From this total cost and unit cost is determined. Cost accounting system: manufacturing cost accounts that are fully integrated into the g/l of the company; an important feature is perpetual inventory system. Provides info immediately on cost of a product. 2 types of cost accounting: job order costing, process cost system. Job order system: costs are assigned to each job or to each batch of goods. Jobs or batches may be completed to fill a special order or to replenish inventory. Each job or batch has a distinguishing characteristic- the object is to compute the cost per job. Records cost for each completed job rather than for set time periods: process cost system: used when series of connected manufacturing processes or departments produce a large volume of uniform or relatively homogeneous products.

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Related Questions

Identify each statement as true or false. If false, indicate howto correct the statement.

1. Process cost systems are used to apply costs to similarproducts that are mass-produced in a continuous fashion.
2. A process cost system is used when each finished unit isindistinguishable from another.
3. Companies that produce soft drinks, motion pictures, andcomputers chips would all use process cost accounting.
4. In a process cost system, costs are tracked by individualjobs.
5. Job order costing and process costing track differentmanufacturing costs elements.
6. Both job order costing and process costing account for directmaterials, direct labor, and manufacturing overhead.
7. Costs flow through the accounts in the same basic way for bothjob order costing and process costing.
8. In a process cost system, only one work in process account isused.
9. In a process cost system, costs are summarized in a job costsheet.
10. In a process cost system, the unit cost is total manufacturingcosts for the period divided by the units produced during theperiod.

Batchelor Company manufactures custom accounting ledgers using ajob-order costing system. Manufacturing Overhead is applied to eachjob as a predetermined rate of 150% of Direct Labor cost. Any underapplied overhead is prorated between work in process, FinishedGoods, and Cost of Goods Sold based on the amount of manufacturingoverhead in their ending balances at the end of each month.

Additional formation:

1. Job 100 was completed but unsold as of 1/31/2016 with actualincurred costs as follows: Direct materials = $3,900 and DirectLabor =$ 2,400

2. Job 101 was the only job in process on 1/31/2016 with actualincurred costs as follows: Direct Materials = $3,300 and DirectLabor = $2,700

3. Job 102, 103, 104, and 105 were started on February 2016

4. Direct Material used in production during February totaled$16,000

5. The total Cost of Goods Manufactured for February was$68,750

6. Actual manufacturing Overhead was $36,000 for February

7. The only job still in process on 2/28/2016 was job 105 whichhas actual incurred costs of $2,800 for Direct Materials and $1,800for Direct Labor

8. The only completed job left unsold on 2/28/2016 was job 104which has actual incurred costs of $3,500 for direct materials and$4,500 for direct labor

A. Calculate the Cost of Goods for Febuary after closing theunder/over applied overhead.

Listed below are seven technical accounting terms introduced oremphasized in this chapter.


Job Order costing

Overhead application rate

Overapplied overhead

Activity-based costing

Cost driver

Cost of finished goods manufactured

Job cost sheet


Each of the following statements may (or may not) describe thsestechinial terms. For each statment, indicate the term described, oramswer "None" if the statement does not correctly describe any ofthe terms.


a. An activity base that can b etraced directly to unitsproduced and can be used as a denominator in computing an overheadapplication rate.

b. The total of all direct lavor, direct materials andmanufacturing overhead transferred from work in process to finishedgoods.

c. A means of assigning indirect product costs to work inprocess during the period.

d. A debit balance remaining in the Manufacturing Overheadaccount at teh end of the period.

e. The type of cost accounting system likely to be used by aconstruction company.

f. The type of cost accounting method likely to be used foroverhead costs.