ABC Company produces a single product. Material A is added at the start of the production process and packaging material B is added at the end of the process. Conversion costs are incurred uniformly throughout the process. Inspection takes place when manufacturing is completed, but before packaging Material B is added. Normal spoilage for this production process is 5% of good output. Spoiled units are discarded. Production data for this year was as follows: Beginning work-in-process inventory (20% complete) 2,000 units Units started 18,000 units Good units completed and sold 16,000 units Ending work-in-process inventory (40% complete) 1,000 units What are equivalent units for Material A, Material B, and Conversion costs? (Use FIFO process costing to find equivalent units for Material A, Material B and Conversion Cost) Show work, please. Thank you. 1) In FIFO, the equivalent units for Material A are? 2) In FIFO, the equivalent units for Material B are? 3) In FIFO, the equivalent units for Conversion cost are?
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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