The accountant at Calgary Mobile needs to close the books at the end of January ,using the following information. Direct materials are added when production is 95% complete. Conversion costs are incurred evenly throughout production. Inspection occurs when production is 80% complete. Normal spoilage is 10% of total completed good units (round to the nearest whole number). Units Work in process, beginning (30% complete for conversion cost) 22,000 Started during the month 148,000 Total good units completed and transferred out 122,000 Work in process, ending (60% complete for conversion cost) 32,000 Costs Beginning inventory: Direct materials $0 Conversion costs $500,000 Total beginning inventory $500,000 Costs added during current period: Direct materials $2,960,000 Conversion costs $1,884,000 Total cost added during current period $4,844,000 REQUIRED: 1. Prepare a process cost report using the FIFO method and the five-step approach.( please show your work clearly for each step). Highlight the cost of good units 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.
The accountant at Calgary Mobile needs to close the books at the end of January ,using the following information. Direct materials are added when production is 95% complete. Conversion costs are incurred evenly throughout production. Inspection occurs when production is 80% complete. Normal spoilage is 10% of total completed good units (round to the nearest whole number).
|
Units |
|
|
Work in process, beginning (30% complete for conversion cost) |
22,000 |
|
Started during the month |
148,000 |
|
Total good units completed and transferred out |
122,000 |
|
Work in process, ending (60% complete for conversion cost) |
32,000 |
|
Costs |
|
|
Beginning inventory: |
|
|
Direct materials |
$0 |
|
Conversion costs |
$500,000 |
|
Total beginning inventory |
$500,000 |
|
Costs added during current period: |
|
|
Direct materials |
$2,960,000 |
|
Conversion costs |
$1,884,000 |
|
Total cost added during current period |
$4,844,000 |
REQUIRED:
1. Prepare a
please show your work clearly for each step). Highlight the cost of good units completed and transferred out
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