The Caterpillar Company manufactures small garden tractors on a highly automated assembly line. Its costing system uses two cost categories, direct materials and conversion costs. Each tractor must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of the productie process. Conversion costs are allocated evenly throughout production. Caterpillar uses FIFO. Data for the Assembly Department for April 2008 are: Work in process, beginning inventory: Direct materials (100% complete) Conversion costs (40% complete) Units started during April Work in process, ending inventory. Direct materials (100% complete) Conversion costs (80% complete) Costs for April 2008: Work in process, beginning inventory: Direct materials 400 units O 1.350 O 1.190 0 1.600 O 1.390 O None of the choices 1,200 units 250 units $100,000 $300,000 $700,000 $1,250,000 Conversion costs Direct materials costs added during April Conversion costs added during April What is the total equivalent units of conversion costs in FIFO?
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.
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