In a Job Order Cost Accounting System, the Effect of the Flow

question 108

Multiple Choice

In a job order cost accounting system, the effect of the flow of direct materials into production will be:

• A) increase in Work-in-Process and decrease in Materials Inventory.
• B) increase in Materials Inventory and decrease in Work-in-Process.
• C) increase in Factory Overhead and decrease in Materials Inventory.
• D) increase in Work-in-Process and decrease in Supplies.

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Definitions:

Weighted-Average Method

A cost accounting method that calculates the cost per unit by dividing the total costs by the total number of units produced, incorporating costs from previous periods.

Equivalent Units of Production

A calculation method used in cost accounting that determines the units produced during a period, adjusting for incomplete units.

Conversion Costs

Costs associated with converting raw materials into finished goods, primarily comprising labor and overhead expenses.

Cost Reconciliation

A process used in cost accounting to verify the difference between the cost of inputs and the cost of outputs within a reporting period.