Question

1) What are primary differences in job cost accounting versus process cost accounting with respect to the following categories? Job Cost Process Cost Type of order Type of product Volume Flexibility Standardization Documents Used Work in Process Accounts 2) How do the journal entries for a process costing system differ from a job costing system? 3) What does equivalent units of production (EUP) measure? Why is EUP used? 4) What are the two types of cost that make up conversion costs? Why would EUP be different for material and conversion? 5) Why is the product cost summary prepared? What is another name for the process cost summary? 6) What are the four steps for calculating the weighted average cost flow system?

Answer 1

Question 1,3,5 and 6 are answered as the student has not given any specific details on which questions to answer.

1.Difference in job cost accounting versus process cost accounting with respect to following categories:

CATEGORY	JOB COST ACCOUNTING	PROCESS COST ACCOUNTING
Type of order	Only for special orders	Several processes or stages are involved in an order
Type of product	Customized	Standardized
Volume	Small	Large
Flexibility	Less	More
Standardization	Less	Highly
Documents used	Job cost sheet	Production cost report
Work in process accounts	May or may not be present at the beginning or end of the financial year	Will always be present at the beginning and end of the financial year.

3. EUP measures the amount of work done by manufacturer on units of output that are partially completed at the end of the financial year. It is used in the production cost reports for producing departments of manufacturers using a process costing system.

5. product cost summary is prepared to monitor departments’ performance and control the expense levels during the production process. The other name for product cost summary is Production Report.

6. The four steps are as follows:

Step 1. Summarize the physical flow of units and compute the equivalent units for direct materials, direct labor, and overhead.

Step 2. Summarize the costs to be accounted for (separated into direct materials, direct labor, and overhead).

Step 3. Calculate the cost per equivalent unit.

Step 4. Use the cost per equivalent unit to assign costs to (1) completed units transferred out and (2) units in ending WIP inventory.