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    Business analysis for Barker Brothers: inventory costs, process cost system, job order

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    Use the following to answer questions 1-2.

    Barker Brothers manufactures a single product using a process involving (1) mixing ingredients and (2) a subsequent packaging operation. Barker uses a process cost system to account for the flow of costs through its production process.

    1. Refer to the information above. In the production process described, the Work in Process Inventory: Packaging Department is debited for:
    a. Costs transferred from the Work in Process Inventory: Mixing Department only.
    b. The cost of materials, direct labor, and overhead applicable to the packaging operation only.
    c. Costs transferred from the Work in Process Inventory: Mixing Department, as well as materials, direct labor, and overhead applicable to the packaging operation.
    d. Costs transferred to the Finished Goods Inventory.

    2. Refer to the information above. In Barker's operation, the Finished Goods Inventory account is debited for:
    a. The cost of units transferred directly from the Mixing Department.
    b. The cost of units transferred directly from the Packaging Department.
    c. The cost of units transferred directly from both the Mixing Department and the Packaging Department.
    d. The cost of the units sold.

    3. In a process cost system, the number of partially completed units at
    the end of the period is typically:
    a. Large in comparison to the number of units completed and transferred to finished goods during the period.
    b. Small in comparison to the number of partially completed units in production at the beginning of the period.
    c. Subtracted from the number of units completed and transferred to finished goods during the period.
    d. Small in comparison to the total number of units completed and transferred to finished goods during the period.

    4. Which of the following is a characteristic of manufacturing overhead
    in a job order cost system?
    a. It is indirectly traceable to specific jobs or units.
    b. It includes the cost of all labor relating to manufacturing operations.
    c. It is assigned to units produced by means of an overhead application rate.
    d. It includes the cost of direct materials used and of indirect labor.

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    Solution Preview

    1.b. the costs relating to other departments are not transferred to the Packaging Department.

    2.b. The cost of units transferred directly from the Packaging Department. The Packaging ...

    Solution Summary

    The solution answers each of the multiple choice questions with an explanation supporting the answer.

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