Fast Co. produces its product through two processing departments: Cutting and Assembly. Direct materials are added at the start of production in the Cutting department, and conversion costs are added evenly throughout each process. The company uses monthly reporting periods for its weighted-average process costing system. The Work in Process Inventory—Cutting account has a balance of $84,300 as of October 1, which consists of $17,100 of direct materials and $67,200 of conversion costs. During the month, the Cutting department incurred the following costs. Direct materials $144,400 Conversion . $862,400 At the beginning of the month, 30,000 units were in process in the Cutting department. During October, the Cutting department started 140,000 units and transferred 150,000 units to the Assembly department. At the end of the month, the Cutting department’s work in process inventory consisted of 20,000 units that were 80% complete with respect to conversion costs. Required 1. Prepare the Cutting department’s process cost summary for October using the weighted-average method. 2. Prepare the journal entry dated October 31 to transfer the cost of the partially completed units to Assembly.
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.
Fast Co. produces its product through two processing departments: Cutting and Assembly. Direct materials
are added at the start of production in the Cutting department, and conversion costs are added evenly
throughout each process. The company uses monthly reporting periods for its weighted-average
costing
which consists of $17,100 of direct materials and $67,200 of conversion costs.
During the month, the Cutting department incurred the following costs.
Direct materials $144,400 Conversion . $862,400 At the beginning of the month, 30,000 units were in process in the Cutting department. During October,
the Cutting department started 140,000 units and transferred 150,000 units to the Assembly department.
At the end of the month, the Cutting department’s work in process inventory consisted of 20,000 units that
were 80% complete with respect to conversion costs.
Required
1. Prepare the Cutting department’s process cost summary for October using the weighted-average
method.
2. Prepare the
Assembly.
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