Napco Refining Company processes gasoline. On June 1 of the current year, 6,400 units were 3⁄5 completed in the Blending Department. During June, 55,000 units entered the Blending Department from the Refining Department. During June, the units in process at the beginning of the month were completed. Of the 55,000 units entering the department,all were completed except 5,200 units that were 1⁄5 completed. The equivalent units for conversion costs for June for the Blending Department were computed as follows:Equivalent units of production in June:To process units in inventory on June 1: 6,400 × 3⁄5 3,840To process units started and completed in June: 55,000 – 6,400 48,600To process units in inventory on June 30: 5,200 × 1⁄5 1,040Equivalent units of production 53,480List the errors in the computation of equivalent units for conversion costs for the Blending Department for June.
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.
Napco Refining Company processes gasoline. On June 1 of the current year, 6,400 units were 3⁄5 completed in the Blending Department. During June, 55,000 units entered the Blending Department from the Refining Department. During June, the units in process at the beginning of the month were completed. Of the 55,000 units entering the department,
all were completed except 5,200 units that were 1⁄5 completed. The equivalent units for conversion costs for June for the Blending Department were computed as follows:
Equivalent units of production in June:
To process units in inventory on June 1: 6,400 × 3⁄5 3,840
To process units started and completed in June: 55,000 – 6,400 48,600
To process units in inventory on June 30: 5,200 × 1⁄5 1,040
Equivalent units of production 53,480
List the errors in the computation of equivalent units for conversion costs for the Blending Department for June.
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