The GreenEarth Aluminum Company uses a process cost accounting system to record the costs of manufacturing rolled aluminum. The manufacturing process consists of three processes. The goods-in-process inventory of one of the processes (the rolling department) on September 1, 2018 and debits to the account for September are summarized below: Beginning balance—5,100 units, 1/3 completed: Direct materials (5,100 x 38.70)$ 197,370 Conversion costs (5,100 x 1/3 x 11.72) 19,924 Total beginning balance 217,294 Additional debits during the month: Costs from Smelting Department (162,000 units) 6,240,000 Direct Labor 765,800 Factory Overhead 1,144,000 During the month of September, the 5,100 units in process at the beginning of the month were completed, and of the 162,000 units entering the department from Smelting, all were completed except 5,400 units that were 4/5 completed (hint—remember the materials are the items transferred from the Smelting Department). A) Determine the number of units transferred to the next department during September. B) Compute the EUP for materials and for conversion costs for September. C) Calculate the unit costs for materials and conversion for September. D) Determine the amount of costs to be assigned to the units transferred to the next department from the rolling department. E) Determine the dollar amount of ending W-I-P inventory as of the end of September.
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 GreenEarth Aluminum Company uses a
Beginning balance—5,100 units, 1/3 completed:
Direct materials (5,100 x 38.70)$ 197,370
Conversion costs (5,100 x 1/3 x 11.72) 19,924
Total beginning balance 217,294
Additional debits during the month:
Costs from Smelting Department (162,000 units) 6,240,000
Direct Labor 765,800
Factory
During the month of September, the 5,100 units in process at the beginning of the month were completed, and of the 162,000 units entering the department from Smelting, all were completed except 5,400 units that were 4/5 completed (hint—remember the materials are the items transferred from the Smelting Department).
A) Determine the number of units transferred to the next department during September.
B) Compute the EUP for materials and for conversion costs for September.
C) Calculate the unit costs for materials and conversion for September.
D) Determine the amount of costs to be assigned to the units transferred to the next department from the rolling department.
E) Determine the dollar amount of ending W-I-P inventory as of the end of September.
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