ACG2071 Chapter 3 (Principles of Managerial Accounting)

Question 1

processes

Accepted Answer

One of a series of steps in manufacturing production; usually assoiated with larger quanities

Question 2

Equivalent Units of Production (EUP)

Accepted Answer

Used to measure the direct material, direct labor, and the manufacturing overhead on partially completed units, and expresses in fully completed units.

ex)
10,000 units at the end of the period are a work-in-progress. They are 100% complete as to Direct Material Cost. They are 25% complete for conversion costs (direct labor & manufacturing overhead)

10,000 units x 100% complete = 10,000 EUP for Direct Materials
10,000 units x 25% complete = 2,500 EUP for Conversion Cost

Question 3

In a what does each of these words mean? "To account": "Accounted for"

Accepted Answer

"To account": Includes the amount in process at te beginning of the period + the amount added during the period

"Accounted for": You have shown where every unit is - no missing units. (every unit is either still in ending Work in Process or has been completed and transferred out.)

Question 4

Costs Pool

Accepted Answer

An accumulation of individual costs

Question 5

Transaction 1—Purchased Materials

Accepted Answer

*Accounts Payable could also be Cash

Question 6

Transaction 2—Used Materials to make products

Accepted Answer

"During July, direct materials were assigned to the two production departments: \$130,200 to the Assembly Department and \$19,000 to the Cutting Department; \$2,000 in indirect materials was accumulated in Manufacturing Overhead."

Question 7

Transaction 3—Incurred Labor Costs

Accepted Answer

"During the month, Puzzle Me assigned \$22,090 in direct labor costs to the Assembly Department and \$3,840 in direct labor costs to the Cutting Department. \$1,500 in indirect labor costs were accumulated in Manufacturing Overhead."

Question 8

Transaction 4—Incurred Actual Overhead Costs

Accepted Answer

"Puzzle Me incurred \$30,000 in machinery depreciation and \$19,000 in indirect costs that were paid in cash, which included rent and utilities. These costs are accumulated in the Manufacturing Overhead account."

Question 9

Transaction 5—Allocated Overhead

Accepted Answer

*This is during the period (So, for example, it would be done every week or month based on the amount of machine hours worked those updates). This transaction is shown in the image. This is based on the the Actual Amount of Allocation Base Used (ex, actual machine hours) x predetermined Overhead rate

*After the period ends, they determine if it is over or under allocated.

Underallocated (debit balance in MO)
Dr COGS:
Cr. Manufacturing Overhead

Overallocated (credit balance in MO)
Dr Manufacturing Overhead
Cr. COGS:

Question 10

Transaction 6—Transferred Costs from the Assembly Department to the Cutting Department

Accepted Answer

*This department process flow changes depending on the company/process. So, going from Assembly -> Cutting is just what this business does. I could be Mixing -> Baking -> Designing for a cake.

So, this happens when one department goes into another.

Question 11

Transaction 7— When you finish making a job or completing a job (Book states: "Transferred Costs from the Cutting Department to Finished Goods Inventory")

Accepted Answer

*Should make perfect sense

Question 12

Transaction 9—Adjusted Manufacturing Overhead

Accepted Answer

Underallocated (debit balance in MO) Dr COGS: Cr. Manufacturing Overhead Overallocated (credit balance in MO) Dr Manufacturing Overhead Cr. COGS:

Question 13

Block Company uses the​ weighted-average method in its process costing system. The Packaging Department started the month with 270 units in​ process, started 1,410 ​units, and had 130 units in process at the end of the period. All materials are added at the beginning of the​ process, and conversion costs are incurred uniformly. The units in process at the end of the month are 30​% complete with respect to conversion costs. During the month 1,550 units were completed and transferred out. Direct Materials \$500 (Beginning Work-in-Process) \$3,400 (Added This Month) \$3,900 (Beginning Work-in-Process Direct Materials + Added This Month Direct Materials) Conversion Costs \$550 (Beginning Work-in-Process) \$5,540 (Added This Month) \$6,090 (Total) (Beginning Work-in-Process Conversion Costs + Added This Month Conversion Costs) Total \$1,050 (Beginning Work-in-Process Direct Materials + Beginning Work-in-Process Conversion Costs) \$8,940 (Added This Month Direct Materials + Added This Month Conversion Costs) \$9,990 (Total Direct Materials + Total Conversion Costs) The cost per equivalent unit for direct materials is?????

Accepted Answer

Step 1:Find

Units completed and transferred out: 1,550
Ending WIP (Units still in process): 130

Step 2: Add them together
Equivalent units (DM) = 1,550 + 130 = 1,680 units

Step 3: Find total Direct Material Cost for the period
-which is \$3,900

Step 4:Cost per EU = 1,680/3,900 = \$2.3214

Anwser: \$2.32 per equivalent Unit

Question 14

The Assembly Department had 4,600

units of beginning inventory in September, and 6,500

units were transferred to it from the Cutting Department. The Assembly Department completed 3,100

units during the month and transferred them to the Packaging Department.

Determine the total number of units to account for by the Assembly Department.

Accepted Answer

"To account for": : Includes the amount in process at te beginning of the period + the amount added during the period 4,600 + 6,500 = 11,100

Question 15

Which characteristic is the same in both job order costing systems and process costing systems?

A.

Types of product costs

B.

Method of record keeping

C.

Flow of costs through the accounts

D.

Number of Work-in-Process Inventory accounts

Accepted Answer

THE ANWSER IS C THEY BOTH HAVE Raw Materials→Work in Process→Finished Goods→Cost of Goods Sold

ACG2071 Chapter 3 (Principles of Managerial Accounting)

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