Question

Which of the following is not a necessary step in preparing a production cost report?

A) Compute the equivalent units of production.
B) Compute the physical unit flow.
C) Prepare the job order cost sheet.
D) Prepare a cost reconciliation schedule.

Answer 1

The answer to the question is 'C) Prepare the job order cost sheet' because the production cost report is used in process costing systems, not job order costing systems. The necessary steps for preparing the report include computing the equivalent units of production, the physical unit flow, and preparing a cost reconciliation schedule.

Step-by-step explanation:

The production cost report is a crucial document in cost accounting that summarizes the production and cost activity within a department for a reporting period. The step that is not necessary in preparing a production cost report is 'C) Prepare the job order cost sheet.'

• Compute the equivalent units of production: This involves identifying the number of completed units and the percentage completion of the units still in process to calculate a comparable measure of output.
• Compute the physical unit flow: This step entails tracking the physical flow of the units through the production process during the period.
• Prepare a cost reconciliation schedule: It shows the costs to be accounted for and how they are allocated between units transferred out and ending work in process.

A job order cost sheet is used in job order costing to track costs assigned to a specific job and is not part of the process costing system.