Pittsburgh Aluminum Company uses a process cost system to record the costs of manufacturing rolled aluminum, which consists of the smelting and rolling processes. Materials are entered from smelting at the beginning of the rolling process. The inventory of Work in Process—Rolling on September 1 and debits to the account during September were as follows: Bal., 1,000 units, 20% completed: Direct materials (1,000 x $5.3) $ 5,300 Conversion (1,000 x 20% x $2.2) 440 $ 5,740 From Smelting Department, 24,200 units $130,680 Direct labor 35,940 Factory overhead 19,352 During September, 1,000 units in process on September 1 were completed, and of the 24,200 units entering the department, all were completed except 2,400 units that were 60% completed. Charges to Work in Process—Rolling for October were as follows: From Smelting Department, 27,800 units $155,680 Direct labor 44,660 Factory overhead 24,052 During October, the units in process at the beginning of the month were completed, and of the 27,800 units entering the department, all were completed except 1,300 units that were 90% completed. Required: 1. Enter the balance as of September 1 in a four-column account for Work in Process—Rolling. Record the debits and the credits in the account for September. Construct a cost of production report and present computations for determining (a) equivalent units of production for materials and conversion, (b) costs per equivalent unit, (c) cost of goods finished, differentiating between units started in the prior period and units started and finished in September, and (d) work in process inventory. If an amount box does not require an entry, leave it blank.
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.
Pittsburgh Aluminum Company uses a
| Bal., 1,000 units, 20% completed: | ||
| Direct materials (1,000 x $5.3) | $ 5,300 | |
| Conversion (1,000 x 20% x $2.2) | 440 | |
| $ 5,740 | ||
| From Smelting Department, 24,200 units | $130,680 | |
| Direct labor | 35,940 | |
| Factory |
19,352 |
During September, 1,000 units in process on September 1 were completed, and of the 24,200 units entering the department, all were completed except 2,400 units that were 60% completed. Charges to Work in Process—Rolling for October were as follows:
| From Smelting Department, 27,800 units | $155,680 |
| Direct labor | 44,660 |
| Factory overhead | 24,052 |
During October, the units in process at the beginning of the month were completed, and of the 27,800 units entering the department, all were completed except 1,300 units that were 90% completed.
Required:
1. Enter the balance as of September 1 in a four-column account for Work in Process—Rolling. Record the debits and the credits in the account for September. Construct a cost of production report and present computations for determining (a) equivalent units of production for materials and conversion, (b) costs per equivalent unit, (c) cost of goods finished, differentiating between units started in the prior period and units started and finished in September, and (d) work in process inventory. If an amount box does not require an entry, leave it blank.
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