Blue Devil Corp. is a manufacturer of plastic bottles. The company uses a process costing system and calculates per-unit costs using the weighted average method. The following data relates to the first production department for the month of February. Beginning Work in Process Inventory: 600 units, 40% complete with respect to conversion. Ending Work in Process Inventory: 800 units, 25% complete with respect to conversion. All direct materials are added at the beginning of the process, and conversion costs are assumed to be incurred uniformly throughout production. The cost of direct materials in beginning Work in Process Inventory was $21,200, and conversion costs in beginning Work in Process were $4,900. During the month, $110,800 of direct materials were added to production. Direct labor for the period was $23,120. Overhead is allocated on at 25% of direct labor costs. Over the course of the month, 10,200 units were completed and transferred out of the first production department to the finishing department. What is the average cost per equivalent unit of conversion costs during February
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.
Blue Devil Corp. is a manufacturer of plastic bottles. The company uses a
- Beginning Work in Process Inventory: 600 units, 40% complete with respect to conversion.
- Ending Work in Process Inventory: 800 units, 25% complete with respect to conversion.
All direct materials are added at the beginning of the process, and conversion costs are assumed to be incurred uniformly throughout production. The cost of direct materials in beginning Work in Process Inventory was $21,200, and conversion costs in beginning Work in Process were $4,900.
During the month, $110,800 of direct materials were added to production. Direct labor for the period was $23,120. Overhead is allocated on at 25% of direct labor costs. Over the course of the month, 10,200 units were completed and transferred out of the first production department to the finishing department.
What is the average cost per equivalent unit of conversion costs during February?
Manufacturing overhead = $23,120*25%
Manufacturing overhead = $5,780
Conversion added during the month = $23,120 +$5,780
Conversion added during the month = $28,900
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