UNITS 2,000 units Beginning Work-in-Process Inventory Transferred in from Assembling Department during the period Completed during the period Ending Work-in-Process Inventory (40% complete for conversion 7,000 units 4,000 units 5,000 units work) COSTS $111,000 Beginning Work-in-Process Inventory (transferred in costs, $93,000; conversion costs, $18,000) 672,000 Transferred in from the Assembly Department during the period 54,000 Conversion costs added during the period
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.
Preparing production cost report, second department with beginning WIP; decision making
Ocean Worthy uses three processes to manufacture lifts for personal watercraft: forming a lift’s parts from galvanized steel, assembling the lift, and testing the completed lift. The lifts are transferred to Finished Goods Inventory before shipment to marinas across the country.
Ocean Worthy’s Testing Department requires no direct materials. Conversion costs are incurred evenly throughout the testing process. Other information follows for the month of August:
The cost transferred into Finished Goods Inventory is the cost of the lifts transferred out of the Testing Department. Ocean Worthy uses Weighted-average
Requirements
- Prepare a production cost report for the Testing Department.
- What is the cost per unit for lifts completed and transferred out to Finished Goods Inventory? Why would management be interested in this cost?
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