Dama Company produces women's blouses and uses the FIFO method to account for its manufacturing costs. The product Dama makes passes through two processes: Cutting and Sewing. During April, Dama's controller prepared the following equivalent units schedule for the Cutting Department: Direct Materials Conversion Costs Units started and completed 45,000 45,000 Units, beginning work in process: 20,000 × 0% — — 20,000 × 50% — 10,000 Units, ending work in process: 20,000 × 100% 20,000 — 20,000 × 25% — 5,000 Equivalent units of output 65,000 60,000 Costs in beginning work in process were direct materials, $25,000; conversion costs, $80,000. Manufacturing costs incurred during April were direct materials, $260,000; conversion costs, $384,000. Required: 1. Prepare a physical flow schedule for April. Dama Company Physical Flow Schedule Units to account for: Total units to account for Units accounted for: Total units accounted for 2. Compute the cost per equivalent unit for April. If required, round your answer to the nearest cent. $ per equivalent unit 3. Determine the cost of ending work in process and the cost of goods transferred out. Cost of ending work in process $ Cost of goods transferred out $ 4. Prepare the journal entry that transfers the costs from Cutting to Sewing.
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.
FIFO Method, Unit Cost, Valuation of Goods Transferred Out and Ending Work in Process
Dama Company produces women's blouses and uses the FIFO method to account for its
| Direct Materials | Conversion Costs | |||||||
| Units started and completed | 45,000 | 45,000 | ||||||
| Units, beginning work in process: | ||||||||
| 20,000 × 0% | — | — | ||||||
| 20,000 × 50% | — | 10,000 | ||||||
| Units, ending work in process: | ||||||||
| 20,000 × 100% | 20,000 | — | ||||||
| 20,000 × 25% | — | 5,000 | ||||||
| Equivalent units of output | 65,000 | 60,000 |
Costs in beginning work in process were direct materials, $25,000; conversion costs, $80,000. Manufacturing costs incurred during April were direct materials, $260,000; conversion costs, $384,000.
Required:
1. Prepare a physical flow schedule for April.
| Dama Company | |
| Physical Flow Schedule | |
| Units to account for: | |
| Total units to account for | |
| Units accounted for: | |
| Total units accounted for |
2. Compute the cost per equivalent unit for April. If required, round your answer to the nearest cent.
$ per equivalent unit
3. Determine the cost of ending work in process and the cost of goods transferred out.
| Cost of ending work in process | $ |
| Cost of goods transferred out | $ |
4. Prepare the
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