Great Southern Furniture Company (GSFC) produces dining tables in a three-stage process: cutting, assembly and staining. Direct materials (lumber) are added at the beginning of the cutting process, and conversion costs are incurred evenly throughout the process. The Cutting Department of GSFC began June with no work-in-process inventory. During the month work was started on 13,000 metres of lumber. Activity in the Cutting Department included cutting 10,000 metres of lumber, which were transferred to the Assembly Department. Process inspection occurs at the end of the process and normally no losses are expected at this stage. However during the month 1,000 meters of lumber were rejected at inspection and sold as scrap at $75 per meter. The ending work-in-process inventory at June 30 was 70% of the way through the cutting process. Production costs incurred in the Cutting Department during June are summarized as follows: Direct materials $2,015,000 Direct labour $209,100 Manufacturing overhead $171,900 (a)Com
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.
Great Southern Furniture Company (GSFC) produces dining tables in a three-stage process: cutting, assembly and staining. Direct materials (lumber) are added at the beginning of the cutting process, and conversion costs are incurred evenly throughout the process. The Cutting Department of GSFC began June with no work-in-process inventory. During the month work was started on 13,000 metres of lumber. Activity in the Cutting Department included cutting 10,000 metres of lumber, which were transferred to the Assembly Department.
Process inspection occurs at the end of the process and normally no losses are expected at this stage. However during the month 1,000 meters of lumber were rejected at inspection and sold as scrap at $75 per meter. The ending work-in-process inventory at June 30 was 70% of the way through the cutting process. Production costs incurred in the Cutting Department during June are summarized as follows:
Direct materials $2,015,000
Direct labour $209,100
Manufacturing
(a)Compute the equivalent units for direct materials and conversion costs.
(b) Compute the cost per univalent unit for direct materials and conversion costs.
(c) Assign the costs to units completed and transferred out of Cutting to Assembly and ending work in process inventory.
(d) State the
(e)
(f) Using a T-Account calculate the manufacturer’s true loss for the unexpected losses incurred in the Cutting Department.
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