Novel Toys, Inc., manufactures plastic water guns. Each gun’s left and right frames are pro-duced in the Molding Department. The left and right frames are then transferred to the Assem-bly Department where the trigger mechanism is inserted and the halves are glued together. (The left and right halves together define the unit of output for the Molding Department.) In June,the Molding Department reported the following data:a. In the Molding Department, all direct materials are added at the beginning of the process.b. Beginning work in process consisted of 3,000 units, 20 percent complete with respect todirect labor and overhead. Costs in beginning inventory included direct materials, $450; andconversion costs, $138.c. Costs added to production during the month were direct materials, $950; and conversioncosts, $2,174.50.d. Inspection takes place at the end of the process. Malformed units are discarded. All spoilageis considered abnormal.e. During the month, 7,000 units were started, and 8,000 good units were transferred out toFinishing. All other units finished were malformed and discarded. There were 1,000 unitsthat remained in ending work in process, 25 percent complete.Required:1. Prepare a physical flow schedule.2. Calculate equivalent units of production using the weighted average method.3. Calculate the unit cost.4. What is the cost of goods transferred out? Ending work in process? Loss due to spoilage?5. Prepare the journal entry to remove spoilage from the Molding 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.
Novel Toys, Inc., manufactures plastic water guns. Each gun’s left and right frames are pro-
duced in the Molding Department. The left and right frames are then transferred to the Assem-
bly Department where the trigger mechanism is inserted and the halves are glued together. (The
left and right halves together define the unit of output for the Molding Department.) In June,
the Molding Department reported the following data:
a. In the Molding Department, all direct materials are added at the beginning of the process.
b. Beginning work in process consisted of 3,000 units, 20 percent complete with respect to
direct labor and overhead. Costs in beginning inventory included direct materials, $450; and
conversion costs, $138.
c. Costs added to production during the month were direct materials, $950; and conversion
costs, $2,174.50.
d. Inspection takes place at the end of the process. Malformed units are discarded. All spoilage
is considered abnormal.
e. During the month, 7,000 units were started, and 8,000 good units were transferred out to
Finishing. All other units finished were malformed and discarded. There were 1,000 units
that remained in ending work in process, 25 percent complete.
Required:
1. Prepare a physical flow schedule.
2. Calculate equivalent units of production using the weighted average method.
3. Calculate the unit cost.
4. What is the cost of goods transferred out? Ending work in process? Loss due to spoilage?
5. Prepare the
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