accounting discussion questions.
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answer the questions first, and review others answer then reply to others.
Name a company that is more likely to use process rather than a job order costing system and why? (2 sentences maximum.)
What is the purpose of a production report? (1 sentence maximum.)
In one sentence, state the difference between the computation of equivalent units using weighted-average versus FIFO.
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Q1- Name a company that is more likely to use process rather than a job order costing system and why?
The textbook mentions many companies that are likely to use a process costing system rather than a job costing system, for example, Novartis (pharmaceuticals). This company is likely to use the process costing system due to mass production, as the process costing system allows the company to determine how many units they have at the end of the accounting reporting period, evaluate the units’ stages of completion, and assign a unit of production costs, Datar and Rajan (2018).
Q2- What is the purpose of a production report?
The purpose of the production report is to summarize the physical flows of production, work-in-process inventory, and their associated costs.
Q3-State the difference between the computation of equivalent units using weighted-average versus FIFO.
The weighted average includes work in process inventory when computing product costs, while FIFO keeps work in process inventory and finished inventory separate.
Datar, S., and M. Rajan, 2018. Horngren’s Cost Accounting, A Managerial Emphasis (16th Ed).
https://saylordotorg.github.io/text_managerial-accounting/s08-05-preparing-a-production-cost-re.html#:~:text=The%20production%20cost%20report,%2Dprocess%20(WIP)%20inventory. (Links to an external site.)
student 2 :
Wrigley Company is a company that is more likely to use process costing rather than a job order costing because they produce similar units of chewing gum. Using process costing helps companies determine how many units are on hand at the end of an accounting reporting period, evaluate the unit’s completeness and assign cost to units produced and in inventory.
The purpose of a production report is to summarize the production and cost activity within a department for a reporting period.
The weighted average method calculates the cost per unit of all work done to date while the FIFO method calculates the cost per unit of work done during the current period.
Resource: Datar and Rajan (2018)