Using the FIFO method, what are the cost assigned to units transferred out and units in ending work in process? 2. Using the average method, what are the cost assigned to units transferred out and units in ending work in process? 3. Using FIFO and weighted average, what is the amount that shall be expensed as incurred?
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 cost data and production data for Beth Company for the month of August were as follows:
Cost Data:
Work in process, August 1: Materials 52,000 Cost added this month: Materials 600,000
Conversion costs 69,000 Conversion costs 1,602,000
Production Data:
Work in process, August 1 (60% complete) 9,375 units Work in process, August 31 (30% to be done) 16,250 units
Started in production this August 100,000 units Normal lost units 1,375 units
Transferred out 90,625 units Abnormal lost units ?
All materials are added at the start of the process and lost units are detected at the inspection point of 75% completion.
Requirement:
1. Using the FIFO method, what are the cost assigned to units transferred out and units in ending work in process?
2. Using the average method, what are the cost assigned to units transferred out and units in ending work in process?
3. Using FIFO and weighted average, what is the amount that shall be expensed as incurred?
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