Process costing Example Ltd uses process costing. Material is introduced at the start of all processes and conversion costs are applied uniformly throughout. Data pertaining to one department for March are as follows: Opening work in process: 6,000 units that are 60% converted, comprising materials $72,000 and conversion cost $45,900 Units started during the period: 16,000 Closing work in process: 4,000 units that are 75% complete Materials costs incurred during the period: $192,000 Conversion costs incurred during the period: $225,000 Required: Using the weighted-average method, calculate the following for the department: The cost per equivalent unit. The cost of goods completed and transferred out of the department during March. The cost of the 31 March work in process inventory in the 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.
Process costing
Example Ltd uses process costing. Material is introduced at the start of all processes and conversion costs are applied uniformly throughout. Data pertaining to one department for March are as follows:
- Opening work in process: 6,000 units that are 60% converted, comprising materials $72,000 and conversion cost $45,900
- Units started during the period: 16,000
- Closing work in process: 4,000 units that are 75% complete
- Materials costs incurred during the period: $192,000
- Conversion costs incurred during the period: $225,000
Required:
Using the weighted-average method, calculate the following for the department:
- The cost per equivalent unit.
- The cost of goods completed and transferred out of the department during March.
- The cost of the 31 March work in process inventory in the department.
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