A calzone company produces frozen calzones in three departments: assembly, freezing, and packaging. In assembly, crust ingredients are added at the beginning of the process. After the crust is made, the sauce, cheese, and toppings are added at the end of the process. Conversion costs are added evenly. Data for the assembly department includes: Beginning WIP inventory 0 units Units started 26,000 units Units completed/transferred to freezing 22,500 units Ending WIP (65% through assembly) 3,500 units Crust ingredients added $33,880 Cheese added $15,000 Sauce and toppings added $ 7,500 Direct labor $24,000 Manufacturing overhead $ 5,730 The cost per equivalent unit ($ per EU) for conversion costs would be closest to Select one: a. $1.15 per EU b. $1.30 per EU c. $1.01 per EU d. $1.00 per EU e. $1.20 per EU
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.
A calzone company produces frozen calzones in three departments: assembly, freezing, and packaging. In assembly, crust ingredients are added at the beginning of the process. After the crust is made, the sauce, cheese, and toppings are added at the end of the process. Conversion costs are added evenly. Data for the assembly department includes:
|
Beginning WIP inventory |
0 units |
|
Units started |
26,000 units |
|
Units completed/transferred to freezing |
22,500 units |
|
Ending WIP (65% through assembly) |
3,500 units |
|
Crust ingredients added |
$33,880 |
|
Cheese added |
$15,000 |
|
Sauce and toppings added |
$ 7,500 |
|
Direct labor |
$24,000 |
|
Manufacturing overhead |
$ 5,730 |
The cost per equivalent unit ($ per EU) for conversion costs would be closest to
Total conversion cost = Direct labor + Manufacturing overhead
= $24,000 + $5,730
= $29,730
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