“I think we goofed when we hired that new assistant controller,” said Richard Spina, president of Kingston Manufacturing Industries. “Just look at this report that he prepared for last month for the Finishing Department. I can’t understand it.” Finishing Department costs: Work in process inventory, April 1, 450 units; materials 100% complete; conversion 60% complete $ 8,208* Costs transferred in during the month from the preceding department, 1,950 units 17,940 Materials cost added during the month 6,210 Conversion costs incurred during the month 13,920 Total departmental costs $46,278 Finishing Department costs assigned to: Completed and transferred to finished goods, 1,800 units at $25.71 per unit $46,278 Work in process inventory, April 30, 600 units; materials 0% complete; conversion 35% complete 0 Total departmental costs assigned $46,278 Table Summary: Two-column table shows descriptions in first column and dollar values in second column. First section calculates total departmental costs for the Finishing Department, and second section calculates total departmental costs assigned for the Finishing Department. A note at the bottom applies to the first dollar amount. “He’s struggling to learn our system,” replied John Harding, the operations manager. “The problem is that he’s been away from process costing for a long time, and it’s coming back slowly.” “It’s not just the format of his report that I’m concerned about. Look at that $25.71 unit cost that he’s come up with for April. Doesn’t that seem high to you?” said Mr. Spina. “Yes, it does seem high; but on the other hand, I know we had an increase in materials prices during April, and that may be the explanation,” replied Mr. Harding. “I’ll get someone else to redo this report and then we can see what’s going on. ” Kingston Manufacturing Industries manufactures a ceramic product that goes through two processing departments—Molding and Finishing. The company uses the weighted-average method in its process costing. Required: 1. As you have learned Process Costing in detail, prepare a report for the Finishing Department showing A) the Physical Flow of units and Equivalent units B) how much would be Cost per Equivalent unit? C) how much cost should have been assigned to the units completed and transferred to finished goods, and how much cost should have been assigned to ending work in process inventory in the Finishing Department.
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.
“I think we goofed when we hired that new assistant controller,” said Richard Spina, president of Kingston Manufacturing Industries. “Just look at this report that he prepared for last month for the Finishing Department. I can’t understand it.”
Finishing Department costs:
Work in process inventory, April 1, 450 units; materials 100% complete; conversion 60% complete $ 8,208*
Costs transferred in during the month from the preceding department, 1,950 units 17,940
Materials cost added during the month 6,210
Conversion costs incurred during the month 13,920
Total departmental costs $46,278
Finishing Department costs assigned to:
Completed and transferred to finished goods,
1,800 units at $25.71 per unit $46,278
Work in process inventory, April 30, 600 units; materials 0% complete; conversion 35% complete 0
Total departmental costs assigned $46,278
Table Summary: Two-column table shows descriptions in first column and dollar values in second column. First section calculates total departmental costs for the Finishing Department, and second section calculates total departmental costs assigned for the Finishing Department. A note at the bottom applies to the first dollar amount.
“He’s struggling to learn our system,” replied John Harding, the operations manager. “The problem is that he’s been away from
“It’s not just the format of his report that I’m concerned about. Look at that $25.71 unit cost that he’s come up with for April. Doesn’t that seem high to you?” said Mr. Spina.
“Yes, it does seem high; but on the other hand, I know we had an increase in materials prices during April, and that may be the explanation,” replied Mr. Harding. “I’ll get someone else to redo this report and then we can see what’s going on.
” Kingston Manufacturing Industries manufactures a ceramic product that goes through two processing departments—Molding and Finishing. The company uses the weighted-average method in its process costing.
Required: 1. As you have learned Process Costing in detail, prepare a report for the Finishing Department showing
A) the Physical Flow of units and Equivalent units
B) how much would be Cost per Equivalent unit?
C) how much cost should have been assigned to the units completed and transferred to finished goods, and how much cost should have been assigned to ending work in process inventory in the Finishing Department.
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