Glenda Manufacturing Company applies process costing in the manufacture of its sole product, "Pharmanex" Manufacturing starts in Department 1 where materials are all added at the start of processing. The good units are then transferred to Department 2 where all the incremental materials needed for its completion are added after final inspection. In Department 1. units are inspected at the end of processing while in Department 2, inspection takes place when the units are 90% completed. Department 1 uses FIFO costing while Department 2 uses the weighted average costing. The production data for the month of August show the following: Department 1 Department 2 UNITS Beginning work in process, August 1 20,000 10,000 Work to be done 80% 20% Ending work in process, August 31 30,000 17,500 Work completed 2/7 5/7 Started in process during August 150,000 Normal spoilage (4% of units started in process) 2,500 Abnormal spoilage (1/4 of normal spoilage) 1,250 COST Work in Process, August 1: Transferred in - 285,450 Materials 135,000 214,875 Conversion costs 97,500 280,725 Current costs: Transferred in - ? Materials 1,980.00 840,000 Conversion costs 3,088,800 1,282,500 Requirement: 1. What is the total costs transferred to Department 2 and the amount of work in-process, end in Department 1, respectively? 2. What is the total costs transferred to the Storeroom and the amount of work in-process, end in Department 2, respectively
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.
Glenda Manufacturing Company applies
Manufacturing starts in Department 1 where materials are all added at the start of processing. The good units are then transferred to Department 2 where all the incremental materials needed for its completion are added after final inspection.
In Department 1. units are inspected at the end of processing while in Department 2, inspection takes place when the units are 90% completed.
Department 1 uses FIFO costing while Department 2 uses the weighted average costing.
The production data for the month of August show the following:
Department 1
Department 2
UNITS
Beginning work in process, August 1
20,000
10,000
Work to be done
80%
20%
Ending work in process, August 31
30,000
17,500
Work completed
2/7
5/7
Started in process during August
150,000
Normal spoilage
(4% of units started in process)
2,500
Abnormal spoilage
(1/4 of normal spoilage)
1,250
COST
Work in Process, August 1:
Transferred in
-
285,450
Materials
135,000
214,875
Conversion costs
97,500
280,725
Current costs:
Transferred in
-
?
Materials
1,980.00
840,000
Conversion costs
3,088,800
1,282,500
Requirement:
1. What is the total costs transferred to Department 2 and the amount of work in-process, end in Department 1, respectively?
2. What is the total costs transferred to the Storeroom and the amount of work in-process, end in Department 2, respectively?
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