New Image Sports uses a process-costing system. For March, the company had the following activities: Beginning work-in-process inventory (1/3 complete) 6,000 units Units placed in production 24,000 units Good units completed 18,000 units Ending work-in-process inventory 10,000 units Cost of beginning work in process $ 5,000 Direct material costs, current $18,000 Conversion costs, current $13,800 Direct materials are placed into production at the beginning of the process. All spoilage is normal and is detected at the end of the process. Ending WIP is 50% completed as to conversion. Required: Prepare a production cost worksheet using the FIFO method. (Summarize the calculation of physical unit equivalent and cost that is assigned to each component of inventory)
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.
New Image Sports uses a process-costing system. For March, the company had the following activities:
Beginning work-in-process inventory (1/3 complete) 6,000 units
Units placed in production 24,000 units
Good units completed 18,000 units
Ending work-in-process inventory 10,000 units
Cost of beginning work in process $ 5,000
Direct material costs, current $18,000
Conversion costs, current $13,800
Direct materials are placed into production at the beginning of the process. All spoilage is normal and is detected at the end of the process. Ending WIP is 50% completed as to conversion.
Required:
Prepare a production cost worksheet using the FIFO method. (Summarize the calculation of physical unit equivalent and cost that is assigned to each component of inventory)
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