Question

A process costing system would best fit the needs of a company that manufacturers: Multiple Choice O Houses O Airplanes. O Food products. O Motorcycles Machinery

Answer 1

1) c) Process costing is most suitable for food industry as there is mass production and identical goods have to be produced

2) d) Time ticket is a source document which is used by employees to report the amount of time spent working on the job

3) b) During the month predetermined overhead rate is used which is calculated at the ebeginning by taking an appropriate base which might be labour hours or machine hours which are expected. Then the applied overheads based on this rate is compared with actual at the end when actual results are obtained

4) d) If the factory overheads have a debit balance then the overheads are underapplied which means that actual overheads are greater than budgeted overheads

5) e) The journal entry for issuance of both direct and indirect material would be work in process dr for direct materials factory overhead dr for indirect materials and credit for raw material

6) b) For amount receivable from sales we debit A/R and credit sales with the amount for which the goods have been sold which is $45000 and another entry is passed to record the cost of goods which are sold in which we debit cogs and credit finished goods with the cost amount which is $20000