Fields Company has two manufacturing departments, forming and painting. The company uses the weighted average method and it reports the following unit data for the Forming department. Units completed in the forming department are transferred to the painting 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.
Fields Company has two manufacturing departments, forming and painting. The company uses the weighted average method and it reports the following unit data for the Forming department. Units completed in the forming department are transferred to the painting department.
| Units | Direct Materials | Conversion | |
|---|---|---|---|
| Percent Complete | Percent Complete | ||
| Beginning work in process inventory | 33,500 | 70% | 30% |
| Units started this period | 470,000 | ||
| Completed and transferred out | 468,500 | ||
| Ending work in process inventory | 35,000 | 90% | 50% |
Production cost information for the forming department follows.
| Beginning work in process | ||
|---|---|---|
| Direct materials | $ 55,000 | |
| Conversion | 22,100 | $ 77,100 |
| Costs added this period | ||
| Direct materials | 1,745,000 | |
| Conversion | 1,154,020 | 2,899,020 |
| Total costs to account for | $ 2,976,120 |
- Calculate the equivalent units of production for both direct materials and conversion for the Forming department.
- Calculate the costs per equivalent unit of production for both direct materials and conversion for the Forming department.
- Using the weighted average method, assign costs to the forming department’s output—specifically, its units transferred to painting and its ending work in process inventory.
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