ABC Products Company uses process costing to manufacture its products. For June, the company had the following data. Beginning work in process inventory Degree of completion 25% 4,500 units Units started in June 15,000 units Units completed 17,500 units Ending work in process inventory Degree of completion 75% 2,000 units Cost of beginning work in process $5,250 Direct material costs, current $16,500 Conversion costs, current $23,945 Direct materials are placed into production at the beginning of the process and conversion costs are incurred evenly throughout the process. Required: Prepare a production cost worksheet using the FIFO method Prepare a production cost worksheet using the Weighted Average Method. Under which circumstances there will be no difference between using FIFO or Weighted Average Method for process costing. Please make your comments only for process costing not as an inventory cost flow approach.
ABC Products Company uses process costing to manufacture its products. For June, the company had the following data. Beginning work in process inventory Degree of completion 25% 4,500 units Units started in June 15,000 units Units completed 17,500 units Ending work in process inventory Degree of completion 75% 2,000 units Cost of beginning work in process $5,250 Direct material costs, current $16,500 Conversion costs, current $23,945 Direct materials are placed into production at the beginning of the process and conversion costs are incurred evenly throughout the process. Required: Prepare a production cost worksheet using the FIFO method Prepare a production cost worksheet using the Weighted Average Method. Under which circumstances there will be no difference between using FIFO or Weighted Average Method for process costing. Please make your comments only for process costing not as an inventory cost flow approach.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
ABC Products Company uses
|
Beginning work in process inventory Degree of completion 25% |
4,500 units |
|
Units started in June |
15,000 units |
|
Units completed |
17,500 units |
|
Ending work in process inventory Degree of completion 75% |
2,000 units |
|
Cost of beginning work in process |
$5,250 |
|
Direct material costs, current |
$16,500 |
|
Conversion costs, current |
$23,945 |
Direct materials are placed into production at the beginning of the process and conversion costs are incurred evenly throughout the process.
Required:
- Prepare a production cost worksheet using the FIFO method
- Prepare a production cost worksheet using the Weighted Average Method.
- Under which circumstances there will be no difference between using FIFO or Weighted Average Method for process costing. Please make your comments only for process costing not as an inventory cost flow approach.
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Introduction:
VIEWRequirement 1: Prepare a production cost worksheet using the FIFO method
VIEWRequirement 1: Per unit cost using FIFO method:
VIEWRequirement 1: Computing total cost using FIFO method:
VIEWRequirement 2: Prepare a production cost worksheet using the Weighted Average Method.
VIEWRequirement 2: Per unit cost using Average method:
VIEWRequirement 2: Computing total cost using Average method:
VIEWRequirement 3:
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