Honeybutter Pty Ltd manufactures a product that goes through two departments prior to completion—the Mixing Department followed by the Packaging Department. The following information is available about work in the first department, the Mixing Department, during June. Percent completed Units Materials Conversion Work in process, beginning 70,000 70% 40% Units started during June 460,000 Completed and transferred out 450,000 Work in process, ending 75% 25% Work in process, beginning $36,550 $13,500 Cost added during June $391,850 $287,300 Required: Assume that the company uses the weighted-average method. (a) Determine the physical units of the ending inventory in June for the Mixing Department (b) Determine the equivalent units for June for the Mixing Department (c) Compute the costs per equivalent unit for June for the Mixing Department (d) Determine the total cost of ending work in process inventory and the total cost of units transferred to the Packaging Department ii) Mannon Company’s accountant exclaimed, ‘our cost accounting system allocates overhead based on direct labour hours, but our overhead costs appear to be more related to set-up activities than to the use of direct labour. It seems as though our costing system allocates too much cost to large batches of product and not enough cost to small batches.’ Do you agree with this statement? Discuss why
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.
Honeybutter Pty Ltd manufactures a product that goes through two departments prior to completion—the Mixing Department followed by the Packaging Department. The following information is available about work in the first department, the Mixing Department, during June.
|
Percent completed |
|||
|
Units |
Materials |
Conversion |
|
|
Work in process, beginning |
70,000 |
70% |
40% |
|
Units started during June |
460,000 |
||
|
Completed and transferred out |
450,000 |
||
|
Work in process, ending |
75% |
25% |
|
|
Work in process, beginning |
$36,550 |
$13,500 |
|
|
Cost added during June |
$391,850 |
$287,300 |
Required:
Assume that the company uses the weighted-average method.
(a) Determine the physical units of the ending inventory in June for the Mixing Department
(b) Determine the equivalent units for June for the Mixing Department
(c) Compute the costs per equivalent unit for June for the Mixing Department
(d) Determine the total cost of ending work in process inventory and the total cost of units transferred to the Packaging Department
ii) Mannon Company’s accountant exclaimed, ‘our cost accounting system allocates
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