ABS Plastic Factory specializes in manufacturing of ABS plastic cups and uses normal costing to allocate overhead cost based on the 120% of labour cost. Production process requires 100% of materials at the start of production. The following are the production and cost data of the company in March 2023. WIP at the beginning of the month Started into production during month Units completed during the month Cost incurred during the month Materials Conversion costs WIP at the end of the month Degree of completion Units 100,000 $250,000 $150,000 Conversion Costs Material Cost Labour Cost Overhead Cost 2,000,000 1,900,000 $180,000 (Labor and overhead were 50% completed) 60% $5,315,000 Labour Overhead 60% $2,981,000 120% on labour cost Note: The company uses weighted average method for inventory costing. Required: a) Compute the equivalent units and costs per equivalent unit for materials, labour, and overhead for the month. b) Determine the amount of cost that should be assigned to the finished goods and ending WIP inventories. c) What is the major differences between weighted average method and FIFO method in calculation of equivalent unit. d) Calculate the equivalent units for materials, labour and overhead by using FIFO method.
ABS Plastic Factory specializes in manufacturing of ABS plastic cups and uses normal costing to allocate overhead cost based on the 120% of labour cost. Production process requires 100% of materials at the start of production. The following are the production and cost data of the company in March 2023. WIP at the beginning of the month Started into production during month Units completed during the month Cost incurred during the month Materials Conversion costs WIP at the end of the month Degree of completion Units 100,000 $250,000 $150,000 Conversion Costs Material Cost Labour Cost Overhead Cost 2,000,000 1,900,000 $180,000 (Labor and overhead were 50% completed) 60% $5,315,000 Labour Overhead 60% $2,981,000 120% on labour cost Note: The company uses weighted average method for inventory costing. Required: a) Compute the equivalent units and costs per equivalent unit for materials, labour, and overhead for the month. b) Determine the amount of cost that should be assigned to the finished goods and ending WIP inventories. c) What is the major differences between weighted average method and FIFO method in calculation of equivalent unit. d) Calculate the equivalent units for materials, labour and overhead by using FIFO method.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
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.
Topic Video
Question
Transcribed Image Text:ABS Plastic Factory specializes in manufacturing of ABS plastic cups and uses normal costing to
allocate overhead cost based on the 120% of labour cost. Production process requires 100% of
materials at the start of production. The following are the production and cost data of the
company in March 2023.
WIP at the beginning of the month
Cost incurred during the month
Materials
Conversion costs
Started into production during month 2,000,000
Units completed during the month
1,900,000
WIP at the end of the month
Units
100,000
Degree of completion
Conversion Costs
Material Cost Labour Cost Overhead
Cost
$250,000 $150,000 $180,000
(Labor and overhead were 50% completed)
60%
$5,315,000
Labour Overhead
60%
$2,981,000 120% on
Note: The company uses weighted average method for inventory costing.
Required:
labour cost
a) Compute the equivalent units and costs per equivalent unit for materials, labour, and
overhead for the month.
b) Determine the amount of cost that should be assigned to the finished goods and ending WIP
inventories.
c) What is the major differences between weighted average method and FIFO method in
calculation of equivalent unit.
d) Calculate the equivalent units for materials, labour and overhead by using FIFO
method.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 5 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education