Hilton_MAcc_Ch4_Solution

Hilton_MAcc_Ch4_Solution - CHAPTER 4 Process Costing and...

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1 CHAPTER 4 Process Costing and Hybrid Product-Costing Systems Answers to Review Questions 4-11 The difference between normal and actual costing lies in the calculation of the manufacturing-overhead cost of the current period. Under actual costing, the manufacturing-overhead cost of the current period is the actual overhead cost incurred during the period. Under normal costing, the current-period manufacturing overhead is computed as the product of the predetermined overhead rate and the actual level of the cost driver used to apply manufacturing overhead. 4-13 Operation costing is a hybrid product-costing system that is used when conversion activities are very similar across product lines, but the direct materials differ significantly. This is often the case in batch manufacturing operations. Conversion costs are accumulated by department, and process-costing methods are used to assign these costs to products. In contrast, direct-material costs are accumulated by job order or by batch, and job-order costing is used to assign direct-material costs to products.
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2 EXERCISE 4-25 (45 MINUTES) 1. Diagram of production process: Work-in-Process Inventory: Preparation Department Batch P25 Batch S33 Accumulated by department Conversion costs: Direct-labor Manufacturing overhead Work-in-Process Inventory: Finishing Department Batch P25 Batch S33 Accumulated by batch Direct- material costs Work-in-Process Inventory: Packaging Department Batch P25 Finished-Goods Inventory 2. The product cost for each basketball is computed as follows: Professional Scholastic Direct material: . .................................................................. Batch P25 ($42,000 ÷ 2,000). ......................................... $21.00 -0- Batch S33 ($45,000 ÷ 4,000). ......................................... -0- $11.25 Conversion: Preparation Department. ............................. 7.50 7.50 Conversion: Finishing Department. ................................. 6.00 6.00 *Conversion: Packaging Department. ............................... .50 -0- Total product cost. ............................................................ $35.00 $24.75
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Hilton_MAcc_Ch4_Solution - CHAPTER 4 Process Costing and...

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