8. Star Corporation fabricates flooring in a series of steps carried out in production departments. All of the material used in the first production department is added at the beginning of the process in that department. The units started in production. were 180,000 and the units transferred to the next production department were 175,000. Other data for May for the first production department is as follows: Percent Complete Materials Work in Process Inventory May 1st Work in Process Inventory May 31st Material cost in Work in Process Inventory May 1st Conversion Cost in Work in Process Inventory May 1st Material Cost added during May Direct Labor Cost added during May Rent on Factory Space for May Security Services for Factory for May Indirect Labor Cost added during May Units 10,000 20,000 Advertising Depreciation of Production Equipment for May Depreciation of Administrative Equipment for May Insurance on Factory Equipment for May $3,000 $8,000 $108,000 $304,000 $160,000 $50,000 $80,000 $12,000 $90,000 $40,000 $20,000 100% 100% Conversion 40% 30%
8. Star Corporation fabricates flooring in a series of steps carried out in production departments. All of the material used in the first production department is added at the beginning of the process in that department. The units started in production. were 180,000 and the units transferred to the next production department were 175,000. Other data for May for the first production department is as follows: Percent Complete Materials Work in Process Inventory May 1st Work in Process Inventory May 31st Material cost in Work in Process Inventory May 1st Conversion Cost in Work in Process Inventory May 1st Material Cost added during May Direct Labor Cost added during May Rent on Factory Space for May Security Services for Factory for May Indirect Labor Cost added during May Units 10,000 20,000 Advertising Depreciation of Production Equipment for May Depreciation of Administrative Equipment for May Insurance on Factory Equipment for May $3,000 $8,000 $108,000 $304,000 $160,000 $50,000 $80,000 $12,000 $90,000 $40,000 $20,000 100% 100% Conversion 40% 30%
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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.
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Transcribed Image Text:8. Star Corporation fabricates flooring in a series of steps carried out in production departments. All of the material used in the first production department is added at the beginning of the process in that department. The units started in production
were 180,000 and the units transferred to the next production department were 175,000. Other data for May for the first production department is as follows:
Percent Complete
Units
10,000
20,000
Work in Process Inventory May 1st
Work in Process Inventory May 31st
Material cost in Work in Process Inventory May 1st
Conversion Cost in Work in Process Inventory May 1st
Material Cost added during May
Direct Labor Cost added during May
Rent on Factory Space for May
Security Services for Factory for May
Indirect Labor Cost added during May
Materials
$3,000
$8,000
$108,000
$304,000
$160,000
$50,000
$80,000
$12,000
100%
100%
Advertising
Depreciation of Production Equipment for May
Depreciation of Administrative Equipment for May
Insurance on Factory Equipment for May
a. Determine the equivalent units for May for the first process.
a. Compute the cost per equivalent unit for May for the first process.
a. Determine the cost of the ending work in process inventory and the total cost of units transferred to the next process in May.
$90,000
$40,000
$20,000
Conversion
40%
30%
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