Rigby Ltd accumulates costs for its single product using process costing. Direct material is added at the beginning of the production process, and conversion activity occurs uniformly throughout the process. The following is a partially completed production report for May.Production report, May Physical units Percentage of completion with respect to conversionEquivalent units Direct materials ConversionWork in process, 1 May 25,000 40% Units started during May 30,000 55,000 Units completed and transferred out during May 35,000 35,000 35,000 Work in process, 31 May 20,000 80% 20,000 16,000 Total units accounted for 55,000 Direct material Conversion Total Work in process, 1 May $143,000 $474,700 $617,700 Costs incurred during May $165,000 $2,009,000 $2,174,000 Total costs to account for $308,000 $2,483,700 $2,791,700Required: a) Complete the following process costing steps using the weighted average method: i Calculation of equivalent units. ii Calculation of unit costs. iii Analysis of total costs. b) Prepare a journal entry to record the transfer of the cost of goods completed and 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.
Rigby Ltd accumulates costs for its single product using
Production report, May Physical units Percentage of completion with respect to conversion
Equivalent units Direct materials Conversion
Work in process, 1 May 25,000 40% Units started during May 30,000 55,000 Units completed and transferred out during May 35,000 35,000 35,000 Work in process, 31 May 20,000 80% 20,000 16,000 Total units accounted for 55,000 Direct material Conversion Total Work in process, 1 May $143,000 $474,700 $617,700 Costs incurred during May $165,000 $2,009,000 $2,174,000 Total costs to account for $308,000 $2,483,700 $2,791,700
Required:
a) Complete the following process costing steps using the weighted average method:
i Calculation of equivalent units.
ii Calculation of unit costs.
iii Analysis of total costs.
b) Prepare a
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