Chapter 6 Answers

Chapter 6 Answers - CHAPTER 6 QUESTIONS 3. 4. 5. 6. 7. 1....

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
CHAPTER 6 QUESTIONS 1. The unit costs of materials, labor, and over-head may be computed by using one equivalent production figure when materials, labor, and overhead are put into process with uniform continuity or in an equal flow. 2. Separate equivalent production figures must be used in computing the unit costs of mate-rials, labor, and overhead when these three elements are not put into process uniformly during production. 3. In determining the cost of the ending work in process, the cost accountant must consider the stage of completion and the point at which materials are added in order to make the proper allocation of cost. 4. In the cost of production summary presented in Chapter 6, the equivalent units are com- puted separately for materials, labor, and factory overhead, while in Chapter 5, only one equivalent unit figure had to be determined. The reason for this difference is that in Chapter 6 the discussion concerning the ac- counting for materials is based on the assumption that materials are not added to the manufacturing process at the same rate as are labor and factory overhead. In Chapter 5, it was assumed that all three cost elements were uniformly added to production. 5. The total number of units completed during a month plus the number of units in process at the end of the month may be less than the total number in process at the beginning of the month plus the number placed in process during the month, because of a loss of units during the process through spoilage and evaporation 6. The usual method of handling the cost of normal processing losses is to include the cost of lost units in the cost of all units finished or still in process. With this approach, the units lost are ignored in the calculation of equivalent production. 7. If some units are normally lost in the manu- facturing process and all good units are to absorb the cost, the effect is to increase the unit cost of the goods completed during the period as well as those still in process at the end of the period. 8. The total manufacturing costs for the month will include those costs applicable to the units that were lost. The equivalent units will be based only on units actually completed or still in process, thereby excluding the units lost. When manufacturing costs for the period are divided by equivalent units for the period, the resulting unit cost will include a portion of the cost relating to the lost units. 9. If goods lost at any time during the process are considered to be abnormal losses or if management desires to account for all losses, the cost of the lost units will be charged to an expense account such as Abnormal Loss of Units. Under this procedure, the number of units lost is taken into consideration in deter- mining equivalent production. The resulting unit cost will be used to compute the amount charged to lost units. 10.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 07/10/2011 for the course BUSINESS 550 taught by Professor Backer during the Spring '11 term at Limestone.

Page1 / 44

Chapter 6 Answers - CHAPTER 6 QUESTIONS 3. 4. 5. 6. 7. 1....

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online