1. The equivalent units for material and conversion. 2. The cost per equivalent unit of material and conversion. 3. The assignment of production costs to the October 31 work-in-process inventory and to goods transferred out. 4. The weighted-average unit cost of leather belts completed and transferred to finished goods.
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.
![Case 4-39 Weighted-Average Process Costing; Ethics (LO 4-3, 4-4, 4-5, 4-6)
[The following information applies to the questions displayed below.]
Laredo Leather Company manufactures high-quality leather goods. The company's profits have declined during the past
nine months. In an attempt to isolate the causes of poor profit performance, management is investigating the
manufacturing operations of each of its products.
One of the company's main products is leather belts. The belts are produced in a single, continuous process in the Dallas
Plant. During the process, leather strips are sewn, punched, and dyed. The belts then enter a final finishing stage to
conclude the process. Labor and overhead are applied continuously during the manufacturing process. All materials,
leather strips, and buckles are introduced at the beginning of the process. The firm uses the weighted-average method to
calculate its unit costs.
The leather belts produced at the Dallas Plant are sold wholesale for $9.45 each. Management wants to compare the
current manufacturing costs per unit with the market prices for leather belts. Top management has asked the Dallas plant
controller to submit data on the cost of manufacturing the leather belts for the month of October. These cost data will be
used to determine whether modifications in the production process should be initiated or whether an increase in the
selling price of the belts is justified. The cost per belt used for planning and control is $5.20.
The work-in-process inventory consisted of 300 partially completed units on October 1. The belts were 25 percent
complete as to conversion. The costs included in the inventory on October 1 were as follows:
Leather strips
Buckles
Conversion costs
2$
980
200
290
Total
$1,470
During October 7,700 leather strips were placed into production. A total of 6,900 leather belts were completed. The work-
in-process inventory on October 31 consisted of 1,100 belts, which were 50 percent complete as to conversion.
The costs charged to production during October were as follows:
Leather strips
Buckles
$ 19,900
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