Part-1

1. How is job costing in service organizations different from job costing in manufacturing environments?

2. If costs increase from one period to another, will costs that are transferred out of one department under FIFO costing be higher or lower than costs that are transferred out using weighted average costing? Why?
3. Jim, the VP of Marketing, says the company should not adopt activity-based costing because it will result in the costs of some of the products going up, but the market will not allow for raising prices. How would you respond?

Part-2

1. The financial records for the Lee Manufacturing Company have been destroyed in a fire. The following information has been obtained from a separate set of books maintained by the cost accountant. The cost accountant now asks for your assistance in computing the missing amounts.

a) What is the amount of the materials purchased?

b) What is the value of the ending Work-in-Process inventory balance?

c) What is the value of the beginning Finished Goods Inventory?

2. Kimbeth Manufacturing uses process costing to control costs in the manufacture of Dust Sensors for the mining industry. The following information pertains to operations for November 2008. (Adapted from June 1995 CMA Exam.)

The beginning inventory was 60% complete as to materials and 20% complete as to conversion costs. The ending inventory was 90% complete as to materials and 40% complete as to conversion costs.

Costs pertaining to November are as follows:

Beginning inventory: direct materials, $54,560; direct labor, $20,320; manufacturing overhead, $15,240

Costs incurred during the month: direct materials, $468,000; direct labor, $182,880; manufacturing overhead, $391,160

a). What is the equivalent unit cost for materials assuming Kimbeth uses first-in, first-out (FIFO) process costing?

b). What is the equivalent unit cost for the conversion costs, assuming Kimbeth uses first- in, first-out (FIFO) process costing?

c) What are the total costs in the ending Work-in-Process Inventory, assuming Kimbeth uses first-in, first-out (FIFO) process costing?

d) What is the equivalent unit cost for materials, assuming Kimbeth uses weighted- average process costing?

e) What is the equivalent unit cost for the conversion costs, assuming Kimbeth uses weighted-average process costing?

3.

Budgeted direct labor cost was $100,000, and budgeted direct material cost was $280,000. The following information was collected on three jobs that were completed during the year:

a) If the company uses activity-based costing (ABC), how much overhead cost should be assigned to Job 101?

b). If the company uses activity-based costing (ABC), what is the cost of each unit of Job 102?