Crystal Company Ltd. makes a single product using two processes. Quality control check takes place during the process, at which point, rejected units are separated from good units. The following details relate to production for the month of June 20X22 for Process 2. Work-in-process, beginning inventory: -0- Transfer from Process 1: 15,000 units valued at $51.40 each Other manufacturing costs incurred during the month: Direct material added $513,000 Direct labour $365,000 Manufacturing overhead $211,000 Normal losses were estimated to be 4% of input during the period. The scrap value of any loss is $38 per At inspection 1,750 units were rejected as These units had reached the following degree of completion: Input material 100% Direct material added 50% Conversion costs 30% 12,000 units were completed and transferred to Finished Goods Work-in-process at the end of June had reached the following degree of completion: Input material 100% Direct material added 80% Conversion costs 40% Required: Prepare a statement of equivalent production to determine the equivalent units for direct materials (From Process 1 & Direct Material Added), and conversion costs and the cost per equivalent unit for direct materials and conversion Calculate the: Total cost of units completed and transferred to Finished Goods inventory Cost of abnormal losses Cost of ending work-in-process inventory in Process Prepare Crystal Company Ltd Work-In-Process Inventory - Process 2 T-account, clearly showing the ending
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.
Crystal Company Ltd. makes a single product using two processes. Quality control check takes place during
the process, at which point, rejected units are separated from good units.
The following details relate to production for the month of June 20X22 for Process 2.
- Work-in-process, beginning inventory: -0-
- Transfer from Process 1: 15,000 units valued at $51.40 each
- Other
manufacturing costs incurred during the month:
|
Direct material added |
$513,000 |
|
Direct labour |
$365,000 |
|
Manufacturing |
$211,000 |
- Normal losses were estimated to be 4% of input during the period. The scrap value of any loss is $38 per
- At inspection 1,750 units were rejected as These units had reached the following degree of completion:
Input material 100%
Direct material added 50%
Conversion costs 30%
- 12,000 units were completed and transferred to Finished Goods
- Work-in-process at the end of June had reached the following degree of completion:
Input material 100%
Direct material added 80%
Conversion costs 40%
Required:
- Prepare a statement of equivalent production to determine the equivalent units for direct materials (From Process 1 & Direct Material Added), and conversion costs and the cost per equivalent unit for direct materials and conversion
- Calculate the:
- Total cost of units completed and transferred to Finished Goods inventory
- Cost of abnormal losses
- Cost of ending work-in-process inventory in Process
- Prepare Crystal Company Ltd Work-In-Process Inventory - Process 2 T-account, clearly showing the ending
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