Assignment 1 -
Costing systems provide information that is used for a large variety of business decisions including planning production of goods and services, pricing products, and controlling associated costs of production. Thus, the choice of an appropriate costing system is a key underlying foundation for good decision making. In a response of 400-600 words address the following questions:
1. In what type of situation would a company use multiple cost accounting systems?
2. What factors should a company take into consideration in deciding whether to use job order costing or process costing?
3. Describe two products or services that might use both process and job order costing methods to determine the cost of a finished unit.
Assignment 2 -
PART 1 - Process costing serves two related purposes. First, it measures the cost of goods manufactured on both a total and per-unit basis. This information is used in valuing inventories and in recording the cost of goods sold. But process costing also provides management with information about the per-unit cost of performing each step in the production process. This information is useful in evaluating the efficiency of production departments and often draws attention to potential cost savings.
Milton Manufacturing uses a process costing system. Products are processed successively by Department × and Department Y and are then transferred to the finished goods warehouse. Shown below is cost information for Department Y during the month of May:
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Cost of work in process at May 1
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$85,000
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Cost of units transferred in from Department X:
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During May
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262,000
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Manufacturing costs added in Department Y:
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Direct materials used
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$210,000
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Direct labor
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45,000
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Manufacturing overhead
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67,000
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322,000
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Total costs charged to Department Y as of May 31
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$699,000
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Process costing system-journal entries
Recreate the following table and prepare a general journal entry summarizing each of the following transaction categories for the month of May (you may omit explanations):
(a) The transfer of production from Department × to Department Y.
(b) The recording of manufacturing costs incurred in Department Y during May. (Use a single journal entry.)
(c) The transfer of completed units from Department Y to the finished goods warehouse.
To calculate the third journal entry, the Ending Inventory balance in Work-in-Process Inventory for Department Y on May 31 is $113,500.
PART 2 - The assignment for this unit will consist of two parts, in a word document of 1-2 pages, APA format, address the following questions.
1. Briefly explain the operation of process costing, including the way the unit costs of finished goods are determined.
2. Discuss how managers will use the information obtained from process costing.