Case #4 Rey Inc. manufactures paint at a local production facility. The company has two production departments, mixing and finishing. The company uses the weighted-average method of process costing. In July, the following data were recorded for the finishing department: Finishing Department Work-in-process, July 1* Transferred-in during July Good units completed and transferred out Work-in-process, July 31^ Total costs added during July Physical Transferred- Direct units materials 10,800 $0 26,600 21,600 14,400 in Costs $49,680 $118,620 * Degree of completion: direct materials, 0%; conversion costs, 60% ^ Degree of completion: direct materials, 100%; conversion costs, 85% $246,840 Conversion Costs $49,572 $231,228 Conversion costs are added evenly during the production process. Direct materials are added when production is 80% complete. The inspection point is at the 90% stage of production. Normal spoilage is 5% of all goods that pass inspection. Spoiled units are disposed of at zero net disposal value. Required: For July, summarize the total costs to account for, compute the cost per equivalent unit for transferred-in, direct materials, and conversion costs, and assign costs to units completed and transferred out (including normal spoilage), to abnormal spoilage, and to units in ending work- in-process.
Case #4 Rey Inc. manufactures paint at a local production facility. The company has two production departments, mixing and finishing. The company uses the weighted-average method of process costing. In July, the following data were recorded for the finishing department: Finishing Department Work-in-process, July 1* Transferred-in during July Good units completed and transferred out Work-in-process, July 31^ Total costs added during July Physical Transferred- Direct units materials 10,800 $0 26,600 21,600 14,400 in Costs $49,680 $118,620 * Degree of completion: direct materials, 0%; conversion costs, 60% ^ Degree of completion: direct materials, 100%; conversion costs, 85% $246,840 Conversion Costs $49,572 $231,228 Conversion costs are added evenly during the production process. Direct materials are added when production is 80% complete. The inspection point is at the 90% stage of production. Normal spoilage is 5% of all goods that pass inspection. Spoiled units are disposed of at zero net disposal value. Required: For July, summarize the total costs to account for, compute the cost per equivalent unit for transferred-in, direct materials, and conversion costs, and assign costs to units completed and transferred out (including normal spoilage), to abnormal spoilage, and to units in ending work- in-process.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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.
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Transcribed Image Text:Case #4
Rey Inc. manufactures paint at a local production facility. The company has two production
departments, mixing and finishing. The company uses the weighted-average method of process
costing. In July, the following data were recorded for the finishing department:
Finishing Department
Work-in-process, July 1*
Transferred-in during July
Good units completed and transferred out
Physical Transferred- Direct
units
in Costs materials
$0
10,800
$49,680
26,600
21,600
14,400
Work-in-process, July 31^
Total costs added during July
$118,620
* Degree of completion: direct materials, 0%; conversion costs, 60%
^ Degree of completion: direct materials, 100%; conversion costs, 85%
$246,840
Conversion
Costs
$49,572
$231,228
Conversion costs are added evenly during the production process. Direct materials are added
when production is 80% complete. The inspection point is at the 90% stage of production.
Normal spoilage is 5% of all goods that pass inspection. Spoiled units are disposed of at zero net
disposal value.
Required:
For July, summarize the total costs to account for, compute the cost per equivalent unit for
transferred-in, direct materials, and conversion costs, and assign costs to units completed and
transferred out (including normal spoilage), to abnormal spoilage, and to units in ending work-
in-process.
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