Drew Implements makes four models of utility and light construction tractors. The model names are DI-1400, DI-3800, DI-5000, and DI- 8000. Drew manufactures the tractors in two departments-Fabrication and Detailing. All four models are processed initially in Fabrication, where all material is assembled into the basic tractor. The DI-1400 model is then transferred to finished goods. After processing in Fabrication, the other three models are transferred to Detailing for additional work (though no new materials are added) and then transferred to finished goods. There were no beginning work-in-process inventories on February 1. Data for February are shown in the following table. Ending work in process is 90 percent complete in Fabrication and 40 percent complete in Detailing. Conversion costs are allocated based on the number of equivalent units processed in each department. Units started. Units completed in Fabrication Units completed in Detailing Materials Conversion costs: Fabrication Total $ 3,514,500 $ 1,463,700 DI-1400 700 650 $ 392,000 DI-3800 575 550 525 $ 1,092,500 DI-5000 350 325 300 $ 1,050,000 DI-8000 175 125 100 $ 980,000
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.
Part A and B are both required.
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