Week 3: Process Costing System/Activity Based Costing System
1) Identify several types of manufacturing companies for which process costing would be an appropriate product-costing system. What characteristics do the products of these companies have that would make process costing a good choice?
2) How is process costing similar and different in a second or later processing department?
Additional Questions for Week #3:
- Process Costing
- Identify several types of manufacturing companies for which process costing would be an appropriate product-costing system. What characteristics do the products of these companies have that would make process costing a good choice?
- Describe one of the journal entries needed in a process costing system. How does this journal entry differ in a job costing system?
- Discuss the four steps involved in the preparation of a production cost report.
- How do managers use the cost per equivalent unit to control material and conversion costs and to evaluate the performance of production department managers?
- Describe the difference between the weighted-average and FIFO method of process costing. Why is the weighted-average method preferred?
- How is process costing similar and different in a second or later processing department?
- Activity-Based Costing
- Will increasing the number of cost pools necessarily increase costing accuracy?
- Discuss how traditional methods of allocating overhead to products might underallocate costs to low production-volume products.