amar Co. manufactures a single product in two departments. All direct materials are added at the beginning of the Forming process. Conversion costs are added evenly throughout the process. During May, the Forming department started 32,400 units, and transferred 34,200 units of product to the Assembly department. Its 5,400 units of beginning work in process consisted of $92,880 of direct materials and $768,708 of conversion costs. It has 3,600 units (100% complete with respect to direct materials and 80% complete with respect to conversion) in process at month-end. During the month, $784,080 of direct materials costs and $3,495,492 of conversion costs were charged to the Forming department. The following additional information is available for the Forming department. Beginning work in process consisted of 5,400 units that were 100% complete with respect to direct materials and 40% complete with respect to conversion. Of the 34,200 units transferred out, 5,400 were from beginning work in process. The remaining 28,800 were units started and completed during May. Assume that Tamar uses the FIFO method to account for its process costing system.
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.
Problem 20-5AA FIFO: Process cost summary; equivalent units; cost estimates LO C3, C4, P4
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Tamar Co. manufactures a single product in two departments. All direct materials are added at the beginning of the Forming process. Conversion costs are added evenly throughout the process. During May, the Forming department started 32,400 units, and transferred 34,200 units of product to the Assembly department. Its 5,400 units of beginning work in process consisted of $92,880 of direct materials and $768,708 of conversion costs. It has 3,600 units (100% complete with respect to direct materials and 80% complete with respect to conversion) in process at month-end. During the month, $784,080 of direct materials costs and $3,495,492 of conversion costs were charged to the Forming department. The following additional information is available for the Forming department.
- Beginning work in process consisted of 5,400 units that were 100% complete with respect to direct materials and 40% complete with respect to conversion.
- Of the 34,200 units transferred out, 5,400 were from beginning work in process. The remaining 28,800 were units started and completed during May.
Assume that Tamar uses the FIFO method to account for its
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