Lights Incorporated calculates cost for an equivalent unit of production using the FIFO method. Data for July: Work-in-process inventory, July 1 (39,500 units): Direct materials (93% completed) $ 122,750 Conversion (57% completed) 77,200 Balance in work in process inventory, July 1 $ 199,950 Units started during July 93,500 Units completed and transferred 108,300 Work-in-process inventory, July 31: Direct materials (93% completed) 24,700 Conversion (57% completed) Cost incurred during July: Direct materials $ 183,500 Conversion costs 291,500 Total equivalent units for conversion under the FIFO method are calculated to be: Multiple Choice 131,271 equivalent units. 122,379 equivalent units. 93,500 equivalent units. 108,300 equivalent units. 99,864 equivalent units.
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.
Lights Incorporated calculates cost for an equivalent unit of production using the FIFO method.
| Data for July: | |
|---|---|
| Work-in-process inventory, July 1 (39,500 units): | |
| Direct materials (93% completed) | $ 122,750 |
| Conversion (57% completed) | 77,200 |
| Balance in work in process inventory, July 1 | $ 199,950 |
| Units started during July | 93,500 |
| Units completed and transferred | 108,300 |
| Work-in-process inventory, July 31: | |
| Direct materials (93% completed) | 24,700 |
| Conversion (57% completed) | |
| Cost incurred during July: | |
| Direct materials | $ 183,500 |
| Conversion costs | 291,500 |
Total equivalent units for conversion under the FIFO method are calculated to be:
-
131,271 equivalent units.
-
122,379 equivalent units.
-
93,500 equivalent units.
-
108,300 equivalent units.
-
99,864 equivalent units.
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