QualCo manufactures a single product in two departments: Cutting and Assembly. Information for the Cutting department for May follows. Beginning work in process inventory Units started and completed Units completed and transferred out Ending work in process inventory Beginning work in process inventory Direct materials Conversion Costs added this period Direct materials Conversion Total costs to account for Equivalent units of production (EUP) Cost per equivalent unit of production + Equivalent units of production Cost per equivalent unit of production Cost assignment Beginning work in process To complete beginning work in process Direct materials Conversion Started and completed Direct materials Conversion Completed and transferred out Ending work in process Direct materials Conversion Total costs accounted for Units EUP Units EUP EUP 37,500 150,000 187,500 51,250 Required: 1-3. Using the FIFO method, assign May's costs to the units transferred out and assign costs to its ending work in process inventory. (Round "Cost per EUP" to 2 decimal places.) $ 74,250 28,500 505,035 398, 395 Direct Materials Conversion Percent Complete 60% 60% $ 102,750 903,430 $ 1,006,180 Direct Materials % Added Materials Cost per EUP Percent Complete 40% Cost per EUP Cost per EUP 20% EUP Total cost Total cost Total cost Conversion % Added Conversion EUP
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.
Under FIFO method, the cost added during the period is considered to calculate cost per equivalent unit.
The equivalent unit is computed by multiplying the units produced with their level of completion.
For beginning work in process, the level of completion is the remaining level that was incomplete.
Example
for material, it is 100% - 60% = 40%
For conversion, it is 100% - 40% = 60%
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