Ferris Corporation makes a powdered rug shampoo in two sequential departments, Compounding and Drying. Materials are added at the beginning of the process in the Compounding Department. Conversion costs are added evenly throughout each process. Ferris uses the weighted average method of process costing. In the Compounding Department, beginning work in process was 2,000 pounds (70% processed), 18,500 pounds were started in process, 18,000 pounds transferred out, and ending work in process was 30% processed. Calculate equivalent units for March 2016 for the Compounding Department. Ferris Corporation
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.
Equivalent Units Calculations—Weighted Average Method
Ferris Corporation makes a powdered rug shampoo in two sequential departments, Compounding and Drying. Materials are added at the beginning of the process in the Compounding Department. Conversion costs are added evenly throughout each process. Ferris uses the weighted average method of
Calculate equivalent units for March 2016 for the Compounding Department.
| Ferris Corporation Flow of Units and Equivalent Units Calculation, March 2016 |
|||||
|---|---|---|---|---|---|
| Equivalent Units | |||||
| % Work done |
Direct Materials |
% Work Done |
Conversion Costs |
||
| Complete/Transferred | Answer | Answer | Answer | Answer | Answer |
| Ending Inventory | Answer | Answer | Answer | Answer | Answer |
| Total | Answer | Answer | Answer |
Process costing is used where the product is generated through multiple processes. It is mainly used in the manufacturing departments.
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