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174. Process cost systems are used to apply costs to similar products that are ____________ in a ____________ fashion. 175. Separate _________________ accounts are maintained for each production department or manufacturing process in a process cost system. 176. In a process cost system, manufacturing costs are summarized in a ________________ report for each department. 177. A primary driver of overhead costs in continuous manufacturing operations is _______________. 178. Equivalent units of production measure the work done during the period, expressed in fully ________________ units. 179. Unit production costs are expressed in terms of _____________ units of production. 180. If a processing department has 27,000 units in process at the beginning of the period, completes and transfers out 80,000 and has 18,000 units in process at the end of the period, then the number of units started into production during the period was ______________ units. 181. A cost reconciliation schedule is prepared to assign total costs to units ______________, and to the units in the _________________ work in process. 182. The production cost report is an internal document that shows production quantity and ______________ for a production department. 183. One of the major benefits of JIT is the elimination of ______________ and ____________ inventory accounts. 184. Under ABC, costs are traced from ________________ to products. 185. ABC seeks to identify the _______________ that measure the activities performed on the product. 186. The primary benefit of activity-based costing is ______________ product costing. MATCHING 187. Match the items in the two columns below by entering the appropriate code letter in the space provided. A. Just-in-time processing B. Equivalent units of production C. Total units accounted for D. Production cost report E. Cost reconciliation schedule F. Units transferred out G. Activity-based costing H. Physical units I. Unit production costs J. Total manufacturing cost per unit ____ 1. A summary of both production quantity and cost data for a production department. ____ 2. Shows that the total costs accounted for equal the total costs to be accounted for. ____ 3. Work done during a period expressed in fully completed units. ____ 4. Focuses on the activities performed in manufacturing a specific product. ____ 5. Actual units to be accounted for during a period, irrespective of any work performed. ____ 6. Units transferred out during the period plus units in ending work in process. ____ 7. Unit materials costs plus unit conversion costs. ____ 8. Total units accounted for minus units in ending work in process. ____ 9. Costs expressed in terms of equivalent units of production. ____ 10. Uses a “pull approach” in manufacturing. 21 – 50 Test Bank for Accounting Principles, Eighth Edition SHORT-ANSWER ESSAY QUESTIONS S-A E 188 Why do some companies need a cost accounting system while others do not? What are the determining characteristics or factors that influence the type of cost accounting system that is appropriate for a company? S-A E 189 The production cost report summarizes the activities that have taken place in a department or process over a period of time. Identify the major types of information found on a production cost report, and indicate who in the business organization uses this type of information and for what purpose the information is used. S-A E 190 (Ethics) Dolly’s Dream Homes, Inc. manufactures doll houses in a continuous process. Various customizing features and furnishings are added at the end of the process to create the various models that are sold. The basic design and floor plans of all the houses are identical, however. During the most recent month, the lumber used in trimming the houses was inadvertently recorded as direct materials. At month end, when the error was discovered, Betty Gray, the accountant, was told by the accounting manager, Donna Foxx, not to bother with correcting the error, because the dollar amount of the error was not “worth it.” Betty believes that the dollar amount is not as important as the quality of the reports. She wonders whether she would be committing an unethical act if she were to make the changes anyway, despite her superior’s telling her not to. Required: 1. Who are the stakeholders in this situation? 2. Was it unethical for the company to ask that the error not be corrected? Explain briefly. 3. Would it be unethical for Betty to correct the error? Explain briefly. S-A E 191 (Communication) Lawrence Leather Goods recently instituted just-in-time management of its inventories. The accounting department carefully modified all its reports to reflect these changes. Required: Prepare a short memo to production department managers, briefly explaining the primary changes they will see on the production cost report.

174. Process cost systems are used to apply costs to similar products that are ____________

in a ____________ fashion.

175. Separate _________________ accounts are maintained for each production department or manufacturing process in a process cost system.

176. In a process cost system, manufacturing costs are summarized in a ________________

report for each department.

177. A primary driver of overhead costs in continuous manufacturing operations is

_______________.

178. Equivalent units of production measure the work done during the period, expressed in fully

________________ units.

179. Unit production costs are expressed in terms of _____________ units of production.

180. If a processing department has 27,000 units in process at the beginning of the period, completes and transfers out 80,000 and has 18,000 units in process at the end of the period, then the number of units started into production during the period was

______________ units.

181. A cost reconciliation schedule is prepared to assign total costs to units ______________, and to the units in the _________________ work in process.

182. The production cost report is an internal document that shows production quantity and

______________ for a production department.

183. One of the major benefits of JIT is the elimination of ______________ and ____________

inventory accounts.

184. Under ABC, costs are traced from ________________ to products.

185. ABC seeks to identify the _______________ that measure the activities performed on the product.

186. The primary benefit of activity-based costing is ______________ product costing.

MATCHING

187. Match the items in the two columns below by entering the appropriate code letter in the space provided.

 

A. Just-in-time processing

B. Equivalent units of production

C. Total units accounted for

D. Production cost report

E. Cost reconciliation schedule

 

F. Units transferred out

G. Activity-based costing

H. Physical units

I. Unit production costs

J. Total manufacturing cost per unit

 

____ 1. A summary of both production quantity and cost data for a production department.
____ 2. Shows that the total costs accounted for equal the total costs to be accounted for.
____ 3. Work done during a period expressed in fully completed units.
____ 4. Focuses on the activities performed in manufacturing a specific product.
____ 5. Actual units to be accounted for during a period, irrespective of any work performed.
____ 6. Units transferred out during the period plus units in ending work in process.
____ 7. Unit materials costs plus unit conversion costs.
____ 8. Total units accounted for minus units in ending work in process.
____ 9. Costs expressed in terms of equivalent units of production.
____ 10. Uses a “pull approach” in manufacturing.

21 – 50 Test Bank for Accounting Principles, Eighth Edition

SHORT-ANSWER ESSAY QUESTIONS

S-A E 188

Why do some companies need a cost accounting system while others do not? What are the determining characteristics or factors that influence the type of cost accounting system that is appropriate for a company?

 

S-A E 189

The production cost report summarizes the activities that have taken place in a department or process over a period of time. Identify the major types of information found on a production cost report, and indicate who in the business organization uses this type of information and for what purpose the information is used.

 

S-A E 190 (Ethics)

Dolly’s Dream Homes, Inc. manufactures doll houses in a continuous process. Various customizing features and furnishings are added at the end of the process to create the various models that are sold. The basic design and floor plans of all the houses are identical, however.

During the most recent month, the lumber used in trimming the houses was inadvertently recorded as direct materials. At month end, when the error was discovered, Betty Gray, the accountant, was told by the accounting manager, Donna Foxx, not to bother with correcting the error, because the dollar amount of the error was not “worth it.” Betty believes that the dollar amount is not as important as the quality of the reports. She wonders whether she would be committing an unethical act if she were to make the changes anyway, despite her superior’s telling her not to.

Required:

1. Who are the stakeholders in this situation?

2. Was it unethical for the company to ask that the error not be corrected? Explain briefly.

3. Would it be unethical for Betty to correct the error? Explain briefly.

 

 

S-A E 191 (Communication)

Lawrence Leather Goods recently instituted just-in-time management of its inventories. The accounting department carefully modified all its reports to reflect these changes.

Required:

Prepare a short memo to production department managers, briefly explaining the primary changes they will see on the production cost report.

 

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