lf completed as to conversion, and complete as to direct materials. The beginning inventory included 40,000 for materials and 60,000 for conversion cost. Ending WIP inventory in department 1 was 40% complete for conversion cost. Materials are added at the start of the process. Beginning WIP in department 2 was 20% incomplete as to conversion. Direct materials for department 2 are added near the end of the process. Beginning inventories included 24,000
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.
Compute for the cost of work-in process, ending using average method.
Luisita Corp. produces product A and product B. It has two departments that process all products. During February, the beginning WIP in department 1 was half completed as to conversion, and complete as to direct materials. The beginning inventory included 40,000 for materials and 60,000 for conversion cost. Ending WIP inventory in department 1 was 40% complete for conversion cost. Materials are added at the start of the process.
Beginning WIP in department 2 was 20% incomplete as to conversion. Direct materials for department 2 are added near the end of the process. Beginning inventories included 24,000 for material cost and 28,000 for conversion costs. WIP, beg cost from preceding department amounted to 54,600. Ending inventory was 70% incomplete. Additional information about the two department are as follows:
| department 1 | department 2 | |
| conversion cost |
28,000 |
68,500 |
| materials added | 48,000 | 34,000 |
| beg, WIP in units | 20,000 | 24,000 |
| units started this period | 60,000 | |
| units transferred this period | 64,000 | 68,000 |
| ending WIP | 20,000 |
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