Caroline Ltd manufactures steel batons. The following data relates to the moulding department for August: Weighted average FIFO Total equivalent units of direct material 76,700 52,700 Total equivalent units of conversion 67,000 52,600 Units completed and transferred out during August 61,500 61,500 The cost data for August were as follows: Work in process, 1 August: Direct material 229,600 Conversion 113,700 Costs incurred during August: Direct material 405,000 Conversion 681,900 There were 24,000 units in process in the moulding department on 1 August that are 100% complete with respect to direct material and 60% complete with respect to conversion. Required: Use the weighted-average method to calculate: (i) the cost of goods completed and transferred out of the moulding department during August, and (ii) the cost of the 31 August work in process inventory of the moulding department. Repeat (a) using the FIFO method.
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.
Caroline Ltd manufactures steel batons. The following data relates to the moulding department for August:
|
|
Weighted average |
FIFO |
|
Total equivalent units of direct material |
76,700 |
52,700 |
|
Total equivalent units of conversion |
67,000 |
52,600 |
|
Units completed and transferred out during August |
61,500 |
61,500 |
The cost data for August were as follows:
|
Work in process, 1 August: |
|
|
Direct material |
229,600 |
|
Conversion |
113,700 |
|
Costs incurred during August: |
|
|
Direct material |
405,000 |
|
Conversion |
681,900 |
There were 24,000 units in process in the moulding department on 1 August that are 100% complete with respect to direct material and 60% complete with respect to conversion.
Required:
- Use the weighted-average method to calculate: (i) the cost of goods completed and transferred out of the moulding department during August, and (ii) the cost of the 31 August work in process inventory of the moulding department.
- Repeat (a) using the FIFO method.
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