Question

A process cost summary for a production department accounts for all costs assigned to that department during the period plus costs that were in the department's Work in Process Inventory account at the beginning of the period.
True

False

In process costing, all indirect materials are charged directly to Work in Process Inventory.

True

False

In a process operation, all labor that is used exclusively by a single production department is considered to be direct labor.

True

False

If the predetermined overhead allocation rate is 245% of direct labor cost, and the Baking Department's direct labor cost for the reporting period is $10,000, the following entry would be made to record the allocation of overhead to the products processed in this department:

Work in Process Inventory, Baking Dept

24,500
Factory Overhead 24,500
True

False

Answer 1

Explanation:

The process cost shows the summary of the activities related to the production. It includes the cost of goods completed & transferred units  and the ending work in process inventory.

So, the given statement is true

The indirect cost are come under the manufacturing overhead cost. So, it would be charged to overhead control account

Thus, the given statement is false.

The direct labor includes that labor which is directly related to the production process of a product. So the single production department is likely to be a direct labor

Thus, the given statement is true.

To record the allocation of overhead, the following journal entry is required

Work in Process Inventory, Baking Dept  A/c Dr $24,500

       To Factory overhead A/c $24,500

(Being the overhead allocation is recorded)

The computation is shown below:

= Direct labor cost  × allocation rate

= $10,000 × 245%

= $24,500

Thus, the given statement is true.