Badgersize Company has the following information for its Forming Department for the month of August. Work in Process Inventory, August 1: 20,000 units Direct materials: 100% complete $ 80,000 Conversion: 20% complete 24,000 Balance in work in process, August 1 $ 104,000 Units started during August 47,000 Units completed and transferred in August 58,000 Work in process (70% complete), August 31 ? Costs charged to Work in Process in August Direct materials $ 161,000 Conversion costs: Direct labor $ 110,000 Overhead applied 135,000 Total conversion $ 245,000 Assume materials are added at the start of processing. Required: a. Calculate the equivalent units for the Forming Department for the month of August. b. Find the cost per equivalent unit of direct materials and conversion associated with the units transferred during the month. (Round your answers to 2 decimal places.)
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.
Badgersize Company has the following information for its Forming Department for the month of August.
| Work in Process Inventory, August 1: 20,000 units | |||
| Direct materials: 100% complete | $ | 80,000 | |
| Conversion: 20% complete | 24,000 | ||
| Balance in work in process, August 1 | $ | 104,000 | |
| Units started during August | 47,000 | ||
| Units completed and transferred in August | 58,000 | ||
| Work in process (70% complete), August 31 | ? | ||
| Costs charged to Work in Process in August | |||
| Direct materials | $ | 161,000 | |
| Conversion costs: | |||
| Direct labor | $ | 110,000 | |
| |
135,000 | ||
| Total conversion | $ | 245,000 | |
Assume materials are added at the start of processing.
Required:
a. Calculate the equivalent units for the Forming Department for the month of August.
b. Find the cost per equivalent unit of direct materials and conversion associated with the units transferred during the month. (Round your answers to 2 decimal places.)
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