COST ACCOUNTING
PROCESS COSTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Debit Work in Process-Department A and credit to Work in Process-Department B
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Debit Work in Process-Department B and credit to Work in Process-Department A
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Debit Work in Process-Department B and credit to Materials
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Debit Finished Goods and credit to Work in Process-Department B
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Detailed explanation-1: -Materials, labor, and/or manufacturing overhead can be added in any processing department. Transferred in costs are accounting for as direct materials, direct labor and overhead. Units are always 100% complete for transferred in costs.
Detailed explanation-2: -Journal entries are used to record and report the financial information relating to the transactions. The example that follows illustrates how the journal entries reflect the process costing system by recording the flow of goods and costs through the process costing environment.
Detailed explanation-3: -Similarities between Process Costing and Job Order Costing Both process costing and job order costing maintain the costs of direct material, direct labor, and manufacturing overhead. The process of production does not change because of the costing method.
Detailed explanation-4: -The entry to record the cost of goods transferred from Department 1 to Department 2 in process costing system is a debit to Work in process Department 2 and a credit Work in process Department 1. If the over-applied factory overhead amount is material, it is transferred to the cost of goods sold at the end of the year.