Question

Q1:

From the following, select the entry to record the factory overhead applied to production in a Job Order Cost System

A.Conversion Costs
Factory Overhead

B.Work in Process
Factory Overhead

C.Factory Overhead
Work in Process

D.Factory Overhead
Accounts Payable

Q2:

Select the proper journal entry to transfer the costs of units completed in the Mixing Department to the Baking Department for further processing in a Process Cost System

A.Work in Process - Baking
Raw Materials Inventory

B.Work in Process - Baking
Work in Process - Mixing

C.Work in Process - Baking
Factory Overhead - Mixing

D.Work in Process - Mixing
Work in Process - Baking

Q3:

Select the proper journal entry to transfer the costs of units completed in the Baking Department to Finished Goods in a Process Cost System

A.Finished Goods
Factory Overhead - Baking

B.Factory Overhead - Baking
Finished Goods

C.Finished Goods
Work in Process - Baking

D.Work in Process - Baking
Finished Goods

Q4:

A manufacturer receives an offer for a special one-time order where the sales price is lower than their regular sales price.

Special Order Sales Price $10

Variable Cost per Unit $9

Fixed Cost per Unit $3

The manufacturer has suffient excess capacity for the offer and it has been determined that the sale would not impact customers in our current market. What statement below is TRUE?

A.Fixed Costs are sunk. As the Sales Price exceeds the Variable Cost per unit, ACCEPT the offer.

B.The Variable Cost per unit PLUS the Fixed Cost per unit must be exactly equal the Sales Price in order for the offer to be accepted.

C.Variable Costs are sunk. As the Sale Price exceeds the Fixed Cost, ACCEPT the offer.

D.Fixed Costs are $3 per unit. Variable Costs are $9 per unit. REJECT the offer as the Sales Price per unit is less than our total cost per unit.

Answer 1

(1) If factory overhead applied to production in a Job Order Cost System, Journal Entry :-

       Work in Progress – Dr

         Factory Overhead- Cr

Option B is correct

(2) If the cost of units completed in the Mixing Department transfers to the Baking Department for further processing, Journal Entry :-

    Work in Process – Baking - Dr
     Work in Process – Mixing – Cr

Option B is correct

(3) If the costs of units completed in the Baking Department to Finished Goods, Journal Entry :-

Finished Goods - Dr
Work in Process – Baking – Cr

Option C is correct

(4) Special Order Sales Price $10

Variable Cost per Unit $9

Fixed Cost per Unit $3

The manufacturer has suffient excess capacity

In this case Fixed cost is sunk cost

Sp of $10 is excess of VC of $9.

Hence accept the offer

Option A is correct