Cost of Units Completed and in Process The charges to Work in Process—Assembly Department for a period, together with information concerning production, are as follows. All direct materials are placed in process at the beginning of production. Work in Process—Assembly Department Bal., 7,000 units, 35% completed 20,370 To Finished Goods, 161,000 units ? Direct materials, 165,000 units @ $2 330,000 Direct labor 331,800 Factory overhead 129,080 Bal. ? units, 55% completed ? a. Based on the above data, determine the different costs listed below. If required, round your interim calculations to two decimal places. 1. Cost of beginning work in process inventory completed this period. $fill in the blank 1 2. Cost of units transferred to finished goods during the period. $fill in the blank 2 3. Cost of ending work in process inventory. $fill in the blank 3 4. Cost per unit of the completed beginning work in process inventory, rounded to the nearest cent. $fill in the blank 4 b. Did the production costs change from the preceding period? c. Assuming that the direct materials cost per unit did not change from the preceding period, did the conversion costs per equivalent unit increase, decrease, or remain the same for the current period?
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 Units Completed and in Process
The charges to Work in Process—Assembly Department for a period, together with information concerning production, are as follows. All direct materials are placed in process at the beginning of production.
| Work in Process—Assembly Department | |||
|---|---|---|---|
| Bal., 7,000 units, 35% completed | 20,370 | To Finished Goods, 161,000 units | ? |
| Direct materials, 165,000 units @ $2 | 330,000 | ||
| Direct labor | 331,800 | ||
| Factory |
129,080 | ||
| Bal. ? units, 55% completed | ? |
a. Based on the above data, determine the different costs listed below.
If required, round your interim calculations to two decimal places.
| 1. Cost of beginning work in process inventory completed this period. | $fill in the blank 1 |
| 2. Cost of units transferred to finished goods during the period. | $fill in the blank 2 |
| 3. Cost of ending work in process inventory. | $fill in the blank 3 |
| 4. Cost per unit of the completed beginning work in process inventory, rounded to the nearest cent. | $fill in the blank 4 |
b. Did the production costs change from the preceding period?
c. Assuming that the direct materials cost per unit did not change from the preceding period, did the conversion costs per equivalent unit increase, decrease, or remain the same for the current period?
Process costing: It is a type of costing method, where the direct costs are accumulated and indirect costs are allocated to products manufactured in bulk quantity. This method is used where the products are manufactured under the various processes and in large batches.
Equivalent units: These are semi completed units which were expressed as fully completed units. For instance, 1,000 units which were 50% complete were as good as 500 units 100% complete. Here, 500 units were equivalent units.
Direct materials: It is the basic input required to manufacture the finished products. The direct/raw materials are processed by incurring conversion costs and other overhead to convert them into finished products.
Direct labor: It is the cost of salaries and wages incurred directly to produce a product. This cost is incurred to convert the raw materials into finished product.
FIFO method: Under this method, the units of beginning work-in process are taken as part of units completed and transferred out. Only the costs incurred during the process are taken for calculating the equivalent units.
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