1. A process cost accounting system is most appropriate when a variety of differ
ID: 2436495 • Letter: 1
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1. A process cost accounting system is most appropriate when a variety of different products are produced, each one requiring different types of materials, labor, and overhead. the focus of attention is on a particular job or order. similar products are mass-produced. individual products are custom made to the specification of customers a. b. c. d. 2. Which of the following is a true statement about process cost systems? a. In process cost systems, costs are accumulated but not assigned. b. A process cost system has one work in process account for each process C. In process cost systems, costs are summarized on job cost sheets. d. Unit costs are not computed in process cost systems 3. A product requires processing in two departments, the Baking Department and then the Packaging Department, before it is completed. Costs transferred out of the Baking Department will be transferred to: a. Finished Goods Inventory b. Cost of Goods Sold. c. Work in Process-Packaging Department. d. Manufacturing Overhead. 4. Cinder Company had the following department information for the month: $60,000 10,000 $90,000 20,000 Total materials costs Equivalent units of materials Total conversion costs Equivalent units of conversion costs How much is the total manufacturing cost per unit? a. $10.50. b. $5.00. c. $4.50. d. $6.00.Explanation / Answer
1.Solution is ( c ): A process cost accounting system is most appropriate when similar products are mass produced. This is true as process cost accounting system is used when organizations produce identical or similar units of the product in bulk. The design and process that is used to produce these units is consistent and that which has been accepted The units that come out of the process arrive in batches. Hence material used to manufacture the products are purchased in bulk.
2.Solution is (c ): A process cost system has one work- in- process account for each process .This process costing system uses multiple work- in -process inventory to identify the flow of the product cost through the various processes and production departments.The total of all the work- in- process of all the processes is the total work in process of the entire company.
3.Solution is (c ): Costs transferred out of the baking department will be transferred- from the work- in –process inventory of the baking department to the work –in-process inventory of the Packaging department as these are the costs associated with the products moving from one department to another and the entry to record this will be as follows:
Work-in-process inventory Packaging a/c----Dr
To Work-in-process inventory Baking a/c
4.Solution is ( a): Manufacturing cost per unit= $ 10.50
Material cost per unit( $60,000/10,000equivalent units)= $ 6/unit
Conversion costs per unit($ 90,000/20,000 equivalent units)=$ 4.5/unit
Therefore Manufacturing cost per unit= $ 10.5/unit
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