A department started the month with beginning work in process inventory of $130,000 ($90,000 for direct materials and $40,000 for conversion). During the month, the department incurred additional direct materials costs of $700,000 and conversion costs of $500,000. Assume that equivalent units for the month were computed as 250,000 for materials and 200,000 for conversion. 1. Compute the department’s cost per equivalent unit of production for the month for direct materials. 2. Compute the department’s cost per equivalent unit of production for the month for conversion.
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 department started the month with beginning work in process inventory of $130,000 ($90,000 for direct
materials and $40,000 for conversion). During the month, the department incurred additional direct materials
costs of $700,000 and conversion costs of $500,000. Assume that equivalent units for the month were
computed as 250,000 for materials and 200,000 for conversion.
1. Compute the department’s cost per equivalent unit of production for the month for direct materials.
2. Compute the department’s cost per equivalent unit of production for the month for conversion.
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