Frito-Lay, Inc., manufactures snack foods. Production of Doritos occurs in four steps: cleaning, mixing, cooking, and drying and packaging. The accounting records of a Frito-Lay plant, located in Casa Grande, Arizona included the following information for Doritos in its Drying and Packaging Department during a week. Summary of Units Work in process, beginning, 5,000 cases Units transferred in from the Cooking Department, 20,000 Units completed, 21,000 Work in process, ending, 4,000 units, 40% completed for conversion costs Summary of Costs Work in process, beginning ($29,000 transferred-in costs, $9,060 conversion costs) $38,060 Transferred in from the Cooking Department 96,000 Direct materials added (at the end of the process) 25,200 Conversion costs added 38,400 Total costs to account for $197,660 Instructions: Prepare a cost of production report for the Drying and Packaging Department. Prepare all journal entries associated with the department. Post the above entries to a “T” account, making sure it balances with the amount you assigned to ending work in process on the cost of production report.
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.
Frito-Lay, Inc., manufactures snack foods. Production of Doritos occurs in four steps: cleaning, mixing, cooking, and drying and packaging. The accounting records of a Frito-Lay plant, located in Casa Grande, Arizona included the following information for Doritos in its Drying and Packaging Department during a week.
Summary of Units
Work in process, beginning, 5,000 cases
Units transferred in from the Cooking Department, 20,000
Units completed, 21,000
Work in process, ending, 4,000 units, 40% completed for conversion costs
Summary of Costs
Work in process, beginning ($29,000 transferred-in costs,
$9,060 conversion costs) $38,060
Transferred in from the Cooking Department 96,000
Direct materials added (at the end of the process) 25,200
Conversion costs added 38,400
Total costs to account for $197,660
Instructions:
- Prepare a cost of production report for the Drying and Packaging Department.
- Prepare all
journal entries associated with the department.
Post the above entries to a “T” account, making sure it balances with the amount you assigned to ending work in process on the cost of production report.
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