Jarvene Corporation uses the FIFO method in its process costing system. The following data are for themost recent month of operations in one of the company’s processing departments:Units in beginning inventory ....................................... 400Units started into production ....................................... 3,000Units in ending inventory ............................................ 300Units transferred to the next department .................... 3,100Materials ConversionPercentage completion of beginning inventory .................... 80% 40%Percentage completion of ending inventory ........................ 70% 60%The cost of beginning inventory according to the company’s costing system was $11,040 of which $8,120was for materials and the remainder was for conversion cost. The costs added during the month amountedto $132,730. The costs per equivalent unit for the month were:Materials ConversionCost per equivalent unit .................................. $25.40 $18.20Required:1. Compute the total cost per equivalent unit for the month.2. Compute the equivalent units of material and of conversion costs in the ending inventory.3. Compute the equivalent units of material and of conversion costs that were required to complete thebeginning inventory.4. Determine the number of units started and completed during the month.5. Determine the costs of ending inventory and units 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.
Jarvene Corporation uses the FIFO method in its
most recent month of operations in one of the company’s processing departments:
Units in beginning inventory ....................................... 400
Units started into production ....................................... 3,000
Units in ending inventory ............................................ 300
Units transferred to the next department .................... 3,100
Materials Conversion
Percentage completion of beginning inventory .................... 80% 40%
Percentage completion of ending inventory ........................ 70% 60%
The cost of beginning inventory according to the company’s costing system was $11,040 of which $8,120
was for materials and the remainder was for conversion cost. The costs added during the month amounted
to $132,730. The costs per equivalent unit for the month were:
Materials Conversion
Cost per equivalent unit .................................. $25.40 $18.20
Required:
1. Compute the total cost per equivalent unit for the month.
2. Compute the equivalent units of material and of conversion costs in the ending inventory.
3. Compute the equivalent units of material and of conversion costs that were required to complete the
beginning inventory.
4. Determine the number of units started and completed during the month.
5. Determine the costs of ending inventory and units transferred out.
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