Goodyear Corporation uses a process cost system in manufacturing its tires for the bicycle industry. Materials are added at the beginning of the process and conversion costs are applied evenly throughout the process. At the beginning of March, the work-in-process is 40% complete and at the end of the month, it is 60% complete. Spoilage is detected at the end of the process. Other data for the month include: Beginning WIP inventory 1,600 units Units started 20,000 units Units placed in finished goods 12,000 units Ending WIP inventory 1,200 units Normal spoilage of units finished 20% Conversion costs P604,800 Cost of direct materials 600,000 Beginning WIP costs Materials 60,000 Conversion 60,480 Use weighted-average method. The total cost transferred out:
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.
Goodyear Corporation uses a
| Beginning WIP inventory | 1,600 units |
| Units started | 20,000 units |
| Units placed in finished goods | 12,000 units |
| Ending WIP inventory | 1,200 units |
| Normal spoilage of units finished | 20% |
| Conversion costs | P604,800 |
| Cost of direct materials | 600,000 |
| Beginning WIP costs | |
| Materials | 60,000 |
| Conversion | 60,480 |
Use weighted-average method.
The total cost transferred out:
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What about its total cost to be accounted for?
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745,200
1,326,240
1,057,980
998,580
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