Dayag Company manufactures toys in two departments, Forming and Finishing Department. In the Forming Department, materials are added when the process is 20% complete while in the Finishing department is added when the process is 80% complete. Conversion costs are added evenly throughout the process. The following data are available for the 6 months ended June 30, 2020: Forming Department: Units Materials CC Transferred In WIP, Jan. 1 3,000 P 75,000 P 21,250 Started 22,000 Completed 20,000 Costs added 700,000 425,000 Finishing Department: WIP, Jan. 1 5,000 -0- P 72,500 P 177,500 Started 20,000 Completed 21,000 Costs added P 231,000 P 384,000 ? Work in process on Jan. 1 is 40% converted in the Forming Department and 60% converted in the Finishing Department. Work in process on June 30 is 25% converted in the Forming department and 30% in the Finishing Department. Required: Using the two inventory valuation methods, determine the following: 1. EUP in each department 2. Cost per EUP in each department 3. Assignment of cost in each department
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.
Dayag Company manufactures toys in two departments, Forming and Finishing Department. In the Forming Department, materials are added when the process is 20% complete while in the Finishing department is added when the process is 80% complete. Conversion costs are added evenly throughout the process. The following data are available for the 6 months ended June 30, 2020:
Forming Department:
Units Materials CC Transferred In
WIP, Jan. 1 3,000 P 75,000 P 21,250
Started 22,000
Completed 20,000
Costs added 700,000 425,000
Finishing Department:
WIP, Jan. 1 5,000 -0- P 72,500 P 177,500
Started 20,000
Completed 21,000
Costs added P 231,000 P 384,000 ?
Work in process on Jan. 1 is 40% converted in the Forming Department and 60% converted in the Finishing Department. Work in process on June 30 is 25% converted in the Forming department and 30% in the Finishing Department.
Required: Using the two
1. EUP in each department
2. Cost per EUP in each department
3. Assignment of cost in each department
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