21. Sprit Beverages, Inc. manufactures a sport drink on a continuous basis. The company makes completed, it is transferred out to the next department. During April, the following results are available for the Mixing department: a. Beginning WIP had 700 units, 30% complete with respect to materials and 60% complete with respect to conversion. Costs in the beginning WIP included material costs of $1,500 and conversion costs of $4,500. b. During April, 9,500 units were started in process. Costs added during the current month (April) were materials, $58,980; and conversion, $86,940. c. At the end of April, total 10,000 units were completed and transferred-out to the Bottling department. The remaining ending WIP was 20% complete with respect to materials and 40% complete with respect to conversion.
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.
Using the FIFO (first-in, first-out) method, (1) prepare a production cost report for the Mixing department and (2) prepare a
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