A production department in a process manufacturing system completed its work on 80,000 units of product and transferred them to the next department during a recent period. Of these units, 24,000 were in process at the beginning of the period. The other 56,000 units were started and completed during the period. At period-end, 16,000 units were in process. Compute the production department’s equivalent units of production for direct materials under each of three separate assumptions using the FIFO method: 1. All direct materials are added to products when processing begins. 2. Beginning inventory is 40% complete as to materials and conversion costs. Ending inventory is 75% complete as to materials and conversion costs. 3. Beginning inventory is 60% complete as to materials and 40% complete as to conversion costs. Ending inventory is 30% complete as to materials and 60% complete as to conversion costs.
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 production department in a process manufacturing system completed its work on 80,000 units of product
and transferred them to the next department during a recent period. Of these units, 24,000 were in process
at the beginning of the period. The other 56,000 units were started and completed during the period. At
period-end, 16,000 units were in process. Compute the production department’s equivalent units of production
for direct materials under each of three separate assumptions using the FIFO method:
1. All direct materials are added to products when processing begins.
2. Beginning inventory is 40% complete as to materials and conversion costs. Ending inventory is 75%
complete as to materials and conversion costs.
3. Beginning inventory is 60% complete as to materials and 40% complete as to conversion costs. Ending
inventory is 30% complete as to materials and 60% complete as to conversion costs.
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