In: Accounting
True Or False
Required 1:With job order costing, manufacturing costs incurred are assigned to jobs when costs can be readily identified with specific customers, jobs, or projects and customized products.
Required 2: The following journal entry would be made when units that have been completed are transferred to the finished goods warehouse:
Debit Finished Goods; Credit Work in Process
Required 3: A flour manufacturer is more likely to use job-order costing than a process costing whereas a manufacturer of customized leather jackets is more likely to use process costing than job-order costing.
Required 1:With job order costing, manufacturing costs incurred are assigned to jobs when costs can be readily identified with specific customers, jobs, or projects and customized products.
The given statement is TRUE as job costing allocate costs based on a specific job order as every client is different and unique.
Required 2: The following journal entry would be made when units that have been completed are transferred to the finished goods warehouse:
Debit Finished Goods; Credit Work in Process
The given statement is TRUE as Finished Goods will increase by the amount WIP decreases as WIP is now converted into Finished Goods.
Required 3: A flour manufacturer is more likely to use job-order costing than a process costing whereas a manufacturer of customized leather jackets is more likely to use process costing than job-order costing.
The given statement is FALSE as Job costing is used for customised orders whereas process costing is used where different processes ( steps after steps ) are involved.