100% complete; conversion 60% complete Costs transferred in during the month from the preceding department, 1,950 units Materials cost added during the month Conversion costs incurred during the month $ 8,208* 17,940 6,210 13,920 $ 46,278 Total departmental costs inishing Department costs assigned to: Units completed and transferred to finished goods, 1,800 units at $25.71 per unit $ 46,278 Work in process inventory, April 30, 600 units; materials 0% complete; conversion 35% complete 0 Total departmental costs assigned $ 46,278 nsists of cost transferred in, $4,068; materials cost, $1,980; and conversion cost, $2,160.
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.
!["I think we goofed when we hired that new assistant controller," said Ruth Scarpino, president of Provost Industries. "Just look at this
report that he prepared for last month for the Finishing Department. I can't understand it."
Finishing Department costs:
Work in process inventory, April 1, 450 units; materials
100% complete; conversion 60% complete
Costs transferred in during the month from the preceding
department, 1,950 units
Materials cost added during the month
Conversion costs incurred during the month
Total departmental costs
Finishing Department costs assigned to:
Units completed and transferred to finished goods, 1,800
units at $25.71 per unit
Work in process inventory, April 30, 600 units; materials 0%
complete; conversion 35% complete
Total departmental costs assigned
$ 8,208*
17,940
6,210
13,920
$ 46,278
$ 46,278
0
$ 46,278
*Consists of cost transferred in, $4,068; materials cost, $1,980; and conversion cost, $2,160.
"He's struggling to learn our system," replied Frank Harrop, the operations manager. "The problem is that he's been away from process
costing for a long time, and it's coming back slowly."
"It's not just the format of his report that I'm concerned about. Look at that $25.71 unit cost that he's come up with for April. Doesn't that
seem high to you?" said Ms. Scarpino.
"Yes, it does seem high; but on the other hand, I know we had an increase in materials prices during April, and that may be the
explanation," replied Mr. Harrop. "I'll get someone else to redo this report and then we can see what's going on."
Provost Industries manufactures a ceramic product that goes through two processing departments-Molding and Finishing. The
company uses the weighted-average method in its process costing.
Required:
1-a. Calculate the equivalent units of production.
1-b. Calculate the cost per equivalent unit. (Round your answers to 2 decimal places.)
1-c. How much cost should have been assigned to the ending work in process inventory? (Round your intermediate calculations to 2
decimal places.)
1-d. How much cost should have been assigned to the units completed and transferred to finished goods? (Round your intermediate
calculations to 2 decimal places.)
Transferred
In Costs
Materials
Conversion
Total
1-a. Equivalent units of production
2,400
1,800
2,010
1-b. Cost per equivalent unit
$
9.17 $
4.55
$
8.00
1-c. Cost of ending work in process inventory
$
5,502
$
1-d. Cost of units completed and transferred out
1,680 $
$
7,182
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