Chapter 04 - Textbook Solution Manual - Homework

Chapter 04 - Textbook Solution Manual - Homework - CHAPTER...

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CHAPTER 4 JOB COSTING 4-2 In a job-costing system, costs are assigned to a distinct unit, batch, or lot of a product or service. In a process-costing system, the cost of a product or service is obtained by using broad averages to assign costs to masses of identical or similar units. 4-3 An advertising campaign for Pepsi is likely to be very specific to that individual client. Job costing enables all the specific aspects of each job to be identified. In contrast, the processing of checking account withdrawals is similar for many customers. Here, process costing can be used to compute the cost of each checking account withdrawal. 4-5 Two major cost objects that managers focus on in companies using job costing are (1) products or jobs, and (2) responsibility centers or departments. 4-8 Two reasons for using an annual budget period are a. The numerator reason––the longer the time period, the less the influence of seasonal patterns, and b. The denominator reason––the longer the time period, the less the effect of variations in output levels on the allocation of fixed costs. 4-9 Actual costing and normal costing differ in their use of actual or budgeted indirect cost rates: Actual Costing Normal Costing Direct-cost rates Indirect-cost rates Actual rates Actual rates Actual rates Budgeted rates Each costing method uses the actual quantity of the direct-cost input and the actual quantity of the cost-allocation base. 4-12 Debit entries to Work-in-Process Control represent increases in work in process. Examples of debit entries under normal costing are (a) direct materials used (credit to Materials Control), (b) direct manufacturing labor billed to job (credit to Wages Payable Control), and (c) manufacturing overhead allocated to job (credit to Manufacturing Overhead Allocated). 4-13 Alternative ways to make end-of-period adjustments for underallocated or overallocated overhead are as follows: (i) Proration based on the total amount of indirect costs allocated (before proration) in the ending balances of work in process, finished goods, and cost of goods sold. (ii) Proration based on total ending balances (before proration) in work in process, finished goods, and cost of goods sold. (iii) Year-end write-off to Cost of Goods Sold. (iv)
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This note was uploaded on 11/19/2010 for the course ACCOUNTING Cost taught by Professor B during the Spring '10 term at Oakton.

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Chapter 04 - Textbook Solution Manual - Homework - CHAPTER...

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