A company began the month of December with work in process inventory of 4,880 units that are 100% complete as to materials and 20% complete as to conversion costs. Units completed and transferred out are 14,640 units. Ending work in process inventory contains 2,440 units that are 100% complete as to materials and 60% complete as to conversion costs. Compute equivalent units of production for both materials and conversion costs for the month of December using the FIFO method.
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.
A company began the month of December with work in process inventory of 4,880 units that are 100% complete as to materials and 20% complete as to conversion costs. Units completed and transferred out are 14,640 units. Ending work in process inventory contains 2,440 units that are 100% complete as to materials and 60% complete as to conversion costs.
Compute equivalent units of production for both materials and conversion costs for the month of December using the FIFO method.
| QUANTITIES | PHISICAL UNITS | MATERIALS | CONVERTION |
| Units to be accounted for | |||
| Work in process inventory (Dec,1) | |||
| started into production | |||
| total units to be accounted | |||
| units accounted for | |||
| work in process inventory Dec, 1 | |||
| started and completed | |||
| work in process inventory Dec,31 | |||
| total units accounted for |
FIFO is the most the most common method used in valuing Inventories. Under FIFO Method, it is assumed that the oldest products are sold first.
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