Muskoge Company uses a process-costing system. The company manufactures a product that is processed in two departments: Molding and Assembly. In the Molding Department, direct materials are added at the beginning of the process; in the Assembly Department, additional direct materials are added at the end of the process. In both departments, conversion costs are incurred uniformly throughout the process. As work is completed, it is transferred out. The following table summarizes the production activity and costs for February: Molding Assembly Beginning inventories: Physical units 10,000 8,000 Costs: Transferred in — $ 45,400 Direct materials $22,000 — Conversion costs $13,800 $ 16,700 Current production: Units started 25,000 ? Units transferred out 30,000 35,000 Costs: Transferred in — ? Direct materials $ 56,250 $ 40,250 Conversion costs $103,500 $142,845 Percentage of completion: Beginning inventory 40% 55% Ending inventory 80 50 Required: 3. Using the FIFO method, prepare the following for the Assembly Department: a. A physical flow schedule b. An equivalent units calculation c. Calculation of unit costs. Round your answer to the nearest cent (i.e., two decimal places). d. Cost of ending work in process and cost of goods transferred out. e. A cost reconciliation. 4. Prepare journal entries that show the flow of manufacturing costs for the Assembly Department: (a) Materials are added at the end of the process, (b) conversion costs are recorded, and (c) units are transferred to Finished Goods.
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Muskoge Company uses a process-costing system. The company manufactures a product that is
processed in two departments: Molding and Assembly. In the Molding Department, direct
materials are added at the beginning of the process; in the Assembly Department, additional
direct materials are added at the end of the process. In both departments, conversion costs are
incurred uniformly throughout the process. As work is completed, it is transferred out. The
following table summarizes the production activity and costs for February:
Molding Assembly
Beginning inventories:
Physical units 10,000 8,000
Costs:
Transferred in — $ 45,400
Direct materials $22,000 —
Conversion costs $13,800 $ 16,700
Current production:
Units started 25,000 ?
Units transferred out 30,000 35,000
Costs:
Transferred in — ?
Direct materials $ 56,250 $ 40,250
Conversion costs $103,500 $142,845
Percentage of completion:
Beginning inventory 40% 55%
Ending inventory 80 50
Required:
3. Using the FIFO method, prepare the following for the Assembly Department:
a. A physical flow schedule
b. An equivalent units calculation
c. Calculation of unit costs. Round your answer to the nearest cent (i.e., two decimal
places).
d. Cost of ending work in process and cost of goods transferred out.
e. A cost reconciliation.
4. Prepare
Department: (a) Materials are added at the end of the process, (b) conversion costs are
recorded, and (c) units are transferred to Finished Goods.
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