Carrie’s Limited has two departments, the assembly department and the testing department in its brake-pad manufacturing plant, where each brake-pad is conveyed through each department. Carrie’s process-costing system consist of two cost categories: Single direct cost (direct materials) and a single indirect-cost category (conversion costs). Direct materials are added at the beginning of the process. Conversion costs are added evenly during the process. When the assembly department finishes work on each brake-pad, it is immediately transferred to testing. Carrie’s uses the weighted-average method of process costing. Data for the assembly department for October 2019 are as follows: Physical Units (Brake Pads) Direct Materials Conversion Costs Work in process, October 1x 6,000 $1,200,000 $ 400,750 Started during October 2019 21,000 Completed during October 2019 23,500 Work in process, October 31y 3,500 Total costs added during October 2019 $4,600,000 $2,456,500 x Degree of completion: direct materials, 100%; conversion costs, 60%. y Degree of completion: direct materials, 100%; conversion costs, 70%. Required: 1. Compute equivalent units in the assembly department, for each cost category? 2. Summarize total assembly department costs for October 2019 for each cost category, and calculate the cost per equivalent unit? 3. Assign total costs to units completed and transferred out and to units in ending work in process?
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.
Carrie’s Limited has two departments, the assembly department and the testing department in
its brake-pad manufacturing plant, where each brake-pad is conveyed through each
department.
Carrie’s process-costing system consist of two cost categories: Single direct cost (direct
materials) and a single indirect-cost category (conversion costs).
Direct materials are added at the beginning of the process. Conversion costs are added evenly
during the process. When the assembly department finishes work on each brake-pad, it is
immediately transferred to testing. Carrie’s uses the weighted-average method of
costing
Data for the assembly department for October 2019 are as follows:
Physical Units
(Brake Pads) Direct Materials Conversion Costs
Work in process, October 1x
6,000 $1,200,000 $ 400,750
Started during October 2019 21,000
Completed during October 2019 23,500
Work in process, October 31y
3,500
Total costs added during October 2019 $4,600,000 $2,456,500
x Degree of completion: direct materials, 100%; conversion costs, 60%.
y Degree of completion: direct materials, 100%; conversion costs, 70%.
Required:
1. Compute equivalent units in the assembly department, for each cost category?
2. Summarize total assembly department costs for October 2019 for each cost category, and
calculate the cost per equivalent unit?
3. Assign total costs to units completed and transferred out and to units in ending work in
process?
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