Epon Corporation uses a process costing system based on the weighted average method. The production supervisor calculates that the equivalent units of the physical units in ending inventory with respect to direct materials and conversion resources are 600 and 250 units respectively. Assume that the equivalent units of the physical units completed and transferred with respect to direct materials and conversion resources are 4,500 and 4,500 units respectively. If the per equivalent unit cost of direct materials and conversion resources is $2 and $1.5 respectively, (1) what is the cost of the units completed and transferred (i.e., the cost of goods manufactured) and (2) what is the cost of the units in the ending inventory
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.
Epon Corporation uses a
If the per equivalent unit cost of direct materials and conversion resources is $2 and $1.5 respectively,
(1) what is the cost of the units completed and transferred (i.e., the cost of goods manufactured) and
(2) what is the cost of the units in the ending inventory
Equivalent units concept is used when opening or ending work in progress is not 100% complete but partially completed. For example , if 10,000 units has been fully completed and 5,000 units has been completed only 50%, it means that equivalent units for ending work in progress will be 2,500 (5000*50%) and equivalent units for fully completed will be 10,000 units.
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