RSM222 Midterm

1. For financial accounting purposes, what is the total amount of product costs incurred to make 10,000 units?

1.For which of the following products would job order costing be least likely to be used?

inventory using the cost method and did not change the method used during the current

4. What inventory method is used to value inventories? Does this method reflect current cost at year-end?

330-10-30330-10-30-1 The primary basis of accounting for inventories is cost, which has been defined generally as the price paid or consideration given to acquire an asset. As applied to inventories, cost means in principle the sum of the applicable expenditures and charges directly or indirectly incurred in bringing an article to its existing condition and location. It is understood to mean acquisition and production cost, and its determination involves many considerations. 330-10-30330-10-30-2 Although principles for the determination of inventory costs may be easily stated, their application, particularly to such inventory items as work in process and finished goods, is difficult because of the variety of considerations in the allocation of costs and charges.

“Companies can choose to use the accounting job order costing method when they have a single product line or numerous products to manufacture. However, it is less costly and less time-consuming if they elect to use process costing when calculating the manufacturing of a single product line. With similarities

3. Briefly describe how the current production cost assignment system works. What are the consumption ratios (activity percentages) for assigning manufacturing overhead to each product at present?

Question 3: Identify all costs associated with this venture. Categorize these costs as fixed or variable.

3. For each of the individual overhead accounts at Bridgeton, do you believe the given cost is variable, fixed, or something else? Why? (Use information or evidence from the case to support your evaluation, if possible. For most of these costs, there is no single right answer from the case information, so the goal is to come up with a reasonable estimate.)

According to this method, every unit of the product is assigned all direct, fixed, and variable costs. This method includes the cost of direct materials and labor as well as a portion of the overhead costs associated with it in the final costing of every unit of the product.

1. Use the Overhead Cost Activity Analysis in Exhibit 5 and other data on manufacturing

7. Though numbers given in the cost data can not be contested, I would definitely contest the way total cost has been computed. The item 345 department operates within a large manufacturing facility that churns out number of other products too. Hence judging the profitability of item 345 on the basis of total cost is not practical.

In the case, it is more advantageous to use absorption costing than the variable costing because it is a simpler method of providing accurate record for the external reporting for a highly unstable manufacturing volume in the manufacturing company. More importantly, the absorption costing provides more accurate picture of cash flow of an organization since the organization will add unsold product to the sale mount of the next fiscal year. (Walther, 2013).With the absorption costing, the organization will be able to transfer the cost of inventory to the costs of goods sold making the organization to reduce the gross profit. The rational behind using the absorption costing is that firms will be able to measure the products as complete costs. (Noreen, E.W. Brewer, P.C. Garrison, R.H. (2013).

42). _____ is least likely to be a cost driver as a basis for applying overhead costs.

If the manufacturing overhead account at month end has a remaining debit balance, this indicates that overhead is under applieD.