Chapter 6 Cost Accounting – Flashcards
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What does the Production cost report summarizes?
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- the number of Physical and equivalent units - Costs incurred during the period - Cost per equivalent unit for each cost element ( e.g., DL, DM, Factory overhead) - Cost assigned to units completed and units in ending WIP inventory
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What are Equivalent Units for?
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For the measure of output for the period. Example: 2 units 50% complete = 1 unit fully complete
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What is cost equivalent unit?
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Costs in each department for the period divided by the " number of equivalent units" produced during the period
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What kind of company use Process Costing system?
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Chemical company, Oil Refining, Textiles, paints, flour, canneries, rubber, steel, glass,cement and sporting goods.
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the typical firm that uses process costing employs a standardized production process to manufacture what?
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Homogeneous products
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Weighted-average method includes all costs in calculating the unit cost including?
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Both cost incurred during the current period and cost incurred in the prior period that are showed as the beginning work-in-process inventory of the current period.
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The FIFO method includes in calculating the unit cost for only?
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cost incurred and work performed during the current period.
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What are the typical characteristics of a company that should use a process costing system?
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A company that should use a process costing system typically has homogenous products, which pass through a series of similar processes or departments. These firms usually engage in continuous mass production of a few products.
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List three types of industries that would likely use process costing?
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Process costing is likely used in industries such as chemicals, oil refining, textiles, paints, flour, canneries, rubber, steel, glass, food processing, mining, automobile production lines, electronics, plastics, drugs, paper, lumber, leather goods, metal products, sporting goods, cement, and watches.
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Explain the primary differences between job costing and process costing.
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Differences between job and process costing: (1) accumulating costs by job versus department, (2) collecting cost data using the job cost sheet vs. the production cost report, and (3) computing unit cost by job vs. department.
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What does the term equivalent units mean?
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Equivalent units are the number of completed units that could have been produced given the amount of work actually performed on both complete and partially completed units.
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