Process costing, FIFO method Xavier Corporation manufactures a plastic toy product in a two-stage production process. Plastic material is brought into the Forming Department where it is shaped. Shaped products are then moved to the Finishing Department where metal is added. Xavier uses the FIFO method in accounting for its production activities. The following data is given for the Forming Department for November: Units for November: Work in process, beginning inventory November 1 300 units Direct materials (100% complete) Conversion (40% complete) Units started in November: 2,200 units Work in process, ending inventory November 30 500 units Direct materials (100% complete) Conversion (25%) Costs for November: Work in process, beginning inventory Direct materials $7,100 Conversion $4,525 Costs added during November: Direct materials $70,400 Conversion $40,100 Required: Determine the equivalent units to complete beginning inventory, for units started and completed, and for ending inventory for direct materials and conversion. Use the FIFO method. Determine the direct materials and conversion costs per equivalent unit. What is the cost assigned to the ending inventory? What is the cost assigned to units transferred out?
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.
Xavier Corporation manufactures a plastic toy product in a two-stage production process. Plastic material is brought into the Forming Department where it is shaped. Shaped products are then moved to the Finishing Department where metal is added. Xavier uses the FIFO method in accounting for its production activities. The following data is given for the Forming Department for November:
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Units for November: |
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Work in process, beginning inventory November 1 |
300 units |
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Direct materials (100% complete) |
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Conversion (40% complete) |
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Units started in November: |
2,200 units |
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Work in process, ending inventory November 30 |
500 units |
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Direct materials (100% complete) |
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Conversion (25%) |
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Costs for November: |
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Work in process, beginning inventory |
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Direct materials |
$7,100 |
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Conversion |
$4,525 |
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Costs added during November: |
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|
Direct materials |
$70,400 |
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Conversion |
$40,100 |
Required:
- Determine the equivalent units to complete beginning inventory, for units started and completed, and for ending inventory for direct materials and conversion. Use the FIFO method.
- Determine the direct materials and conversion costs per equivalent unit.
- What is the cost assigned to the ending inventory?
What is the cost assigned to units transferred out?
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