a) Compute the equivalent units and cost per equivalent units for direct materials (From Moulding & Direct materials added) and conversion costs. (b) Compute the: i. cost of the unexpected losses ii. total cost of the handles completed and transferred out of the Packaging Department iii. cost of ending work in process inventory in the Polishing Department
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) Compute the equivalent units and cost per equivalent units for direct materials (From Moulding &
Direct materials added) and conversion costs.
(b) Compute the:
i. cost of the unexpected losses
ii. total cost of the handles completed and transferred out of the Packaging Department
iii. cost of ending work in process inventory in the Polishing Department
![Fen Furnishings produces brass handles for the furniture industry in a four-stage process -Mixing, Moulding,
Polishing and Packaging. Costs incurred in the Polishing Department during January are summarized as follows:
WIP - Polishing Process A/C
January 1 Bal.
Transfer from Moulding
20,000
1,310,000
391,600
638,000
307,400
Direct Materials Added
Direct Labour
Manufacturing Overhead
Normal losses are estimated to be 2%% of input during the period. Inspection takes place during the processing
operation, at which point damaged handles are separated from good handles and sold as scrap to local furniture
manufacturers at $85 each.
At inspection, 2,000 handles were rejected as scrap. These units had reached the following degree of completion:
Transfer from Moulding
100%
Direct material added
40%
Conversion costs
20%
Work-in-progress at the end of January was 4,000 handles and had reached the following degree of completion:
Transfer from Moulding
100%
Direct material added
80%
Conversion costs
50%
Direct materials added and conversion costs are incurred uniformly throughout the process.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F79a6502a-79ff-4c49-9514-be591dd30531%2Fc6a3d6cb-20e5-4074-9ae6-635a7f7db0b6%2F842a31k_processed.png&w=3840&q=75)
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