Hi-T Company uses the weighted average method of process costing. Information for the company's first production process follows. All direct materials are added at the beginning of this process, and conversion costs are added uniformly throughout the process. Units Direct Materials Conversion Percent Complete Percent Complete Beginning work in process inventory 2,000 100% 80% Completed and transferred out 23,000 Ending work in process inventory 7,000 100% 40% Beginning work in process Direct materials $ 45,000 Conversion 56,320 $ 101,320 Costs added this period Direct materials 375,000 Conversion 341,000 716,000 Total costs to account for $ 817,320 a. Compute the equivalent units of production for both direct materials and conversion. b. Compute the cost per equivalent unit for both direct materials and conversion. c. Assign costs to the department’s output—specifically, to the units transferred out and to the units in ending work in process inventory.
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.
Hi-T Company uses the weighted average method of
| Units | Direct Materials | Conversion | |
|---|---|---|---|
| Percent Complete | Percent Complete | ||
| Beginning work in process inventory | 2,000 | 100% | 80% |
| Completed and transferred out | 23,000 | ||
| Ending work in process inventory | 7,000 | 100% | 40% |
| Beginning work in process | ||
|---|---|---|
| Direct materials | $ 45,000 | |
| Conversion | 56,320 | $ 101,320 |
| Costs added this period | ||
| Direct materials | 375,000 | |
| Conversion | 341,000 | 716,000 |
| Total costs to account for | $ 817,320 |
a. Compute the equivalent units of production for both direct materials and conversion.
b. Compute the cost per equivalent unit for both direct materials and conversion.
c. Assign costs to the department’s output—specifically, to the units transferred out and to the units in ending work in process inventory.
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