Explain how total cost for completed and transferred out will be calculated using the FIFO method for Finishing Department. Explain how equivalent unit is calculated under the weighted-average method for Finishing Department.
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.
Datuk Ali Sdn Bhd (DASB) produces floor fan that passes through TWO (2) processing departments namely Assembly Department and Finishing Department. All direct materials are added at the beginning of the process in both departments. Meanwhile the conversion cost occurs uniformly throughout the production process. The following data is for the month of October 2020 for Finishing Department:
|
Production Data |
|
|
Beginning work in process inventory |
4,725 units |
|
Ending work in process inventory |
5,775 units |
|
Percentage of completion (conversion cost): |
|
|
Beginning work in process inventory |
40% |
|
Ending work in process inventory |
60% |
|
Current production: |
|
|
Units started into production |
? |
|
Units completed and transferred out |
26,513 |
|
Units started and completed |
21,788 |
|
|
|
|
Cost Data |
|
|
Costs of beginning work in process inventory: |
|
|
Transferred-in |
RM37,170 |
|
Direct materials |
RM29,435 |
|
Conversion costs |
RM18,179 |
|
Cost in the current period: |
|
|
Transferred-in |
RM110,252 |
|
Direct materials |
RM82,689 |
|
Conversion costs |
RM56,176 |
REQUIRED:
- Explain how total cost for completed and transferred out will be calculated using the FIFO method for Finishing Department.
- Explain how equivalent unit is calculated under the weighted-average method for Finishing Department.
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