Cost of Production Report: Average Cost Method Sunrise Coffee Company roasts and packs coffee beans. The process begins in the Roasting Department. From the Roasting Department, the coffee beans are transferred to the Packing Department. The following is a partial work in process account of the Roasting Department at December 31: ACCOUNT Work in Process—Roasting Department ACCOUNT NO. Date Item Debit Credit Balance Debit Credit Dec. 1 Bal., 10,500 units, 75% completed 21,000 31 Direct materials, 210,400 units 246,800 267,800 31 Direct labor 135,700 403,500 31 Factory overhead 168,630 572,130 31 Goods transferred, 208,900 units ? ? 31 Bal., ? units, 25% completed ? Required: Prepare a cost of production report, using the average cost method, and identify the missing amounts for Work in Process—Roasting Department. If required, round your cost per equivalent unit answer to the nearest cent. Sunrise Coffee Company Cost of Production Report-Roasting Department For the Month Ended December 31 Unit Information Units to account for during production: Inventory in process, December 1 Received from materials storeroom Total units accounted for by the Roasting Department Units to be assigned costs: Whole Units Equivalent Units of Production Transferred to Packing Department in December Inventory in process, December 31 Total units to be assigned costs Cost Information Unit costs: Costs Total costs for December in Roasting Department $ Total equivalent units Cost per equivalent unit $ Costs charged to production: Inventory in process, December 1 $ Costs incurred in December Total costs accounted for by the Roasting Department $ Costs allocated to completed and partially completed units: Transferred to Packing Department in December $ Inventory in process, December 31 Total costs assigned by the Roasting Department $
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.
Cost of Production Report: Average Cost Method
Sunrise Coffee Company roasts and packs coffee beans. The process begins in the Roasting Department. From the Roasting Department, the coffee beans are transferred to the Packing Department. The following is a partial work in process account of the Roasting Department at December 31:
| ACCOUNT Work in Process—Roasting Department | ACCOUNT NO. | |||||||
| Date | Item | Debit | Credit | Balance | ||||
| Debit | Credit | |||||||
| Dec. | 1 | Bal., 10,500 units, 75% completed | 21,000 | |||||
| 31 | Direct materials, 210,400 units | 246,800 | 267,800 | |||||
| 31 | Direct labor | 135,700 | 403,500 | |||||
| 31 | Factory |
168,630 | 572,130 | |||||
| 31 | Goods transferred, 208,900 units | ? | ? | |||||
| 31 | Bal., ? units, 25% completed | ? |
Required:
Prepare a cost of production report, using the average cost method, and identify the missing amounts for Work in Process—Roasting Department. If required, round your cost per equivalent unit answer to the nearest cent.
| Sunrise Coffee Company | ||
| Cost of Production Report-Roasting Department | ||
| For the Month Ended December 31 | ||
| Unit Information | ||
| Units to account for during production: | ||
| Inventory in process, December 1 | ||
| Received from materials storeroom | ||
| Total units accounted for by the Roasting Department | ||
| Units to be assigned costs: | ||
| Whole Units | Equivalent Units of Production | |
| Transferred to Packing Department in December | ||
| Inventory in process, December 31 | ||
| Total units to be assigned costs | ||
| Cost Information | ||
| Unit costs: | ||
| Costs | ||
| Total costs for December in Roasting Department | $ | |
| Total equivalent units | ||
| Cost per equivalent unit | $ | |
| Costs charged to production: | ||
| Inventory in process, December 1 | $ | |
| Costs incurred in December | ||
| Total costs accounted for by the Roasting Department | $ | |
| Costs allocated to completed and partially completed units: | ||
| Transferred to Packing Department in December | $ | |
| Inventory in process, December 31 | ||
| Total costs assigned by the Roasting Department | $ |
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