Cornerstone Exercise 6.8 Cost Information and FIFO Gunnison Company had the following equivalent units schedule and cost information for its Sewing Department for the month of December: Direct Materials Conversion Costs Units started and completed Add: Units in beginning work in process X Percentage complete: 5,000 x 0% direct materials 40,000 40,000 5,000 x 50% conversion costs 2,500 Add: Units in ending work in process X Percentage complete: 10,000 x 100% direct materials 10,000 x 35% conversion costs Equivalent units of output 10,000 3,500 50,000 46,000 Costs: Work in process, December 1: $ 35,000 10,000 Direct materials Conversion costs Total work in process $ 45,000 Current costs: Direct materials $400,000 Conversion costs 184,000 S584,000 Total current costs Required: 1. Calculate the unit cost for December, using the FIFO method. 2. Calculate the cost of goods transferred out, calculate the cost of EWIP, and reconcile the costs assigned with the costs to account for. 3. What if you were asked for the unit cost from the month of November? Calculate Novem- ber's unit cost and explain why this might be of interest to management.
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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