Data concerning a recent period’s activity in the Prep Department, the first processing department in a company that uses process costing, appear below: Materials Conversion Equivalent units in ending work in process inventory 2,110 910 Cost per equivalent unit $ 15.16 $ 6.03 A total of 20,900 units were completed and transferred to the next processing department during the period. Required: 1. Compute the cost of ending work in process inventory for materials, conversion, and in total. 2. Compute the cost of the units completed and transferred out for materials, conversion, and in total.
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.
Exercise 4-4 (Algo) Assigning Costs to Units—Weighted-Average Method [LO 4-4]
Data concerning a recent period’s activity in the Prep Department, the first processing department in a company that uses
| Materials | Conversion | |
|---|---|---|
| Equivalent units in ending work in process inventory | 2,110 | 910 |
| Cost per equivalent unit | $ 15.16 | $ 6.03 |
A total of 20,900 units were completed and transferred to the next processing department during the period.
Required:
1. Compute the cost of ending work in process inventory for materials, conversion, and in total.
2. Compute the cost of the units completed and transferred out for materials, conversion, and in total.
Process costing is used in an organization where a similar kind of product is produced and goods are produced through different processes. The equivalent cost of material and conversion is used when goods are in work in process conditions.
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