Kirkland Company manufactures a product for which materials are added at the beginning of the manufacturing process. A review of the company's inventory and cost records for the most recently completed year revealed the following information: units materials conversion Work in process, Jan 1 80% complete with respect to conversion costs 100,000 100,000 157,500 units started into production 500,000 costs added during the year: materials 650,000 conversion 997,500 units completed during the year 450,000 The company uses the weighted-average method in its process costing system. The ending inventory is 50% complete with respect to conversion costs. Required:a) Compute the equivalent units of production and the cost per equivalent units for materials and for conversion costs. b) Determine the cost transferred to finished goods. c) Determine the amount of cost that should be assigned to the 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.
Kirkland Company manufactures a product for which materials are added at the beginning of the manufacturing process. A review of the company's inventory and cost records for the most recently completed year revealed the following information:
units materials conversion
Work in process, Jan 1
80% complete with respect
to conversion costs 100,000 100,000 157,500
units started into production 500,000
costs added during the year:
materials 650,000
conversion 997,500
units completed during the year 450,000
The company uses the weighted-average method in its
Required:
a) Compute the equivalent units of production and the cost per equivalent units for materials and for conversion costs.
b) Determine the cost transferred to finished goods.
c) Determine the amount of cost that should be assigned to the ending work-in-process inventory.
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