Fullerton Aggregate processes raw shale into lightweight aggregate material. Fullerton has only one production department. This department heat treats shale and injects it with fly ash as it passes through rotating kilns. The shape both expands and hardens in the process, and is ideally suited to road construction. Fullerton uses the weighted-average process costing method to account for production. The following information is available for a recent period: Beginning work in process on september 1 consisted of 80,000 tons that were 70% complete with respect to raw materials and 40% complete with respect to conversion costs. Ending work in process on September 30 consisted of 50,000 tons that were 80% complete with respect to raw materials and 30% complete with respect to conversion costs. 905,000 tons of material were put into production, and 935,000 tons exited production. There is no spoilage or loss of tonnage in the production process. Beginning work in process carried a total cost of $274,000 (direct materials: $119,000, direct labor: $61,000, and factory overhead: $94,000). Additional costs incurred during the month were $3,500,000 (direct materials: $1,800,000, direct labor: $1,100,000, and factory overhead: $600,000). (a) Prepare a cost of production report for September. (b) Prepare journal entries to reflect 1) the introduction of additional costs during September, and (2) the transfer of complete units to finished goods
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.
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