Dover Chemical Company manufactures specialty chemicals by a series of three processes, all materials being introduced in the Distilling Department. From the Distilling Department, the materials pass through the Reaction and Filling departments, emerging as finished chemicals.The balance in the account Work in Process—Filling was as follows on January 1:Work in Process—Filling Department(3,400 units, 60% completed):Direct materials (3,400 × $9.58) $32,572Conversion (3,400 × 60% × $3.90) 7,956 $40,528The following costs were charged to Work in Process—Filling during January:Direct materials transferred from ReactionDepartment: 52,300 units at $9.50 a unit $496,850Direct labor 101,560Factory overhead 95,166During January, 53,000 units of specialty chemicals were completed. Work in Process— Filling Department on January 31 was 2,700 units, 30% completed.Instructions1. Prepare a cost of production report for the Filling Department for January.2. Journalize the entries for costs transferred from Reaction to Filling and the costs transferred from Filling to Finished Goods.3. Determine the increase or decrease in the cost per equivalent unit from December to January for direct materials and conversion costs.4. Discuss the uses of the cost of production report and the results of part (3).
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.
Dover Chemical Company manufactures specialty chemicals by a series of three processes, all materials being introduced in the Distilling Department. From the Distilling Department, the materials pass through the Reaction and Filling departments, emerging as finished chemicals.
The balance in the account Work in Process—Filling was as follows on January 1:
Work in Process—Filling Department
(3,400 units, 60% completed):
Direct materials (3,400 × $9.58) $32,572
Conversion (3,400 × 60% × $3.90) 7,956
$40,528
The following costs were charged to Work in Process—Filling during January:
Direct materials transferred from Reaction
Department: 52,300 units at $9.50 a unit $496,850
Direct labor 101,560
Factory
During January, 53,000 units of specialty chemicals were completed. Work in Process— Filling Department on January 31 was 2,700 units, 30% completed.
Instructions
1. Prepare a cost of production report for the Filling Department for January.
2.
3. Determine the increase or decrease in the cost per equivalent unit from December to January for direct materials and conversion costs.
4. Discuss the uses of the cost of production report and the results of part (3).
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