The following information concerns production in the Baking Department for March. All direct materials are placed in process at the beginning of production. ACCOUNT Work in Process—Baking Department ACCOUNT NO. Date Item Debit Credit Balance Debit Credit Mar. 1 Bal., 18,000 units, 1⁄4 completed 14,760 31 Direct materials, 336,000 units 252,000 266,760 31 Direct labor 40,000 306,760 31 Factory overhead 60,530 367,290 31 Goods finished, 330,000 units 346,410 20,880 31 Bal. ? units, 2⁄5 completed 20,880 a. Based on the above data, determine each cost listed below. Round "cost per equivalent unit" answers to the nearest cent. 1. Direct materials cost per equivalent unit $fill in the blank 1 2. Conversion cost per equivalent unit $fill in the blank 2 3. Cost of the beginning work in process completed during March $fill in the blank 3 4. Cost of units started and completed during March $fill in the blank 4 5. Cost of the ending work in process $fill in the blank 5 b. Assuming that the direct materials cost is the same for February and March, did the conversion cost per equivalent unit increase, decrease, or remain the same in March?
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.
The following information concerns production in the Baking Department for March. All direct materials are placed in process at the beginning of production.
| ACCOUNT Work in Process—Baking Department | ACCOUNT NO. | |||||||
| Date | Item | Debit | Credit | Balance | ||||
| Debit | Credit | |||||||
| Mar. | 1 | Bal., 18,000 units, 1⁄4 completed | 14,760 | |||||
| 31 | Direct materials, 336,000 units | 252,000 | 266,760 | |||||
| 31 | Direct labor | 40,000 | 306,760 | |||||
| 31 | Factory |
60,530 | 367,290 | |||||
| 31 | Goods finished, 330,000 units | 346,410 | 20,880 | |||||
| 31 | Bal. ? units, 2⁄5 completed | 20,880 |
a. Based on the above data, determine each cost listed below. Round "cost per equivalent unit" answers to the nearest cent.
| 1. Direct materials cost per equivalent unit | $fill in the blank 1 |
| 2. Conversion cost per equivalent unit | $fill in the blank 2 |
| 3. Cost of the beginning work in process completed during March | $fill in the blank 3 |
| 4. Cost of units started and completed during March | $fill in the blank 4 |
| 5. Cost of the ending work in process | $fill in the blank 5 |
b. Assuming that the direct materials cost is the same for February and March, did the conversion cost per equivalent unit increase, decrease, or remain the same in March?
Process costing is applied where the cost is identified on the basis of processes. There are some units of production which are not completely finished during the period, so the equivalent units are computed. The cost is distributed on the basis of these equivalent units and a cost production report is prepared.
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