Equivalent Units; Weighted-Average and FIFO Equivalent Unit Cost Pablo Company calculates the cost for an equivalent unit of production using process costing.Work-in-Process Inventory, June 1: 30,000 unitsDirect materials: 100% complete $ 60,000Conversion: 40% complete 25,000Balance in Work-in-Process, June 1 $ 85,000Units started during June 70,000Units completed and transferred out 70,000Work-in-Process Inventory, June 30 30,000Direct materials: 100% completeConversion: 80% completeCosts incurred during JuneDirect materials $122,500Conversion costsDirect labor 119,720Applied overhead 179,580Total conversion costs $299,300Required1. Compute the costs per equivalent unit for both the weighted-average and FIFO methods. (Round thecost per equivalent unit to four decimal places)2. Explain the difference between the FIFO and weighted-average equivalent unit costs.
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.
Equivalent Units; Weighted-Average and FIFO Equivalent Unit Cost Pablo Company calculates the cost for an equivalent unit of production using process costing.
Work-in-Process Inventory, June 1: 30,000 units
Direct materials: 100% complete $ 60,000
Conversion: 40% complete 25,000
Balance in Work-in-Process, June 1 $ 85,000
Units started during June 70,000
Units completed and transferred out 70,000
Work-in-Process Inventory, June 30 30,000
Direct materials: 100% complete
Conversion: 80% complete
Costs incurred during June
Direct materials $122,500
Conversion costs
Direct labor 119,720
Applied overhead 179,580
Total conversion costs $299,300
Required
1. Compute the costs per equivalent unit for both the weighted-average and FIFO methods. (Round the
cost per equivalent unit to four decimal places)
2. Explain the difference between the FIFO and weighted-average equivalent unit costs.
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