Loran Inc. had the following equivalent units schedule and cost for its fabrication department during September: Materials Conversion Units completed 180,000 180,000 Add: Units in ending WIP x Fraction complete 79,000 51,350 (79,000 x 65%) Equivalent units of output 259,000 231,350 Costs: Work in process, September 1: Materials $147,000 Conversion costs 7,875 Total $154,875 Current costs: Materials $1,068,000 Conversion costs 289,055 Total $1,357,055 Required: 1. Calculate the unit cost for materials, for conversion, and in total for the fabrication department for September. If required, round your answers to the nearest cent. Unit materials cost $4.69 Unit conversion cost $1.28 Total unit cost $5.97 2. Calculate the cost of units transferred out and the cost of EWIP. Round unit cost value to the nearest cent in intermediate calculations. If required, round final answers to the nearest dollar. Cost transferred out $1074600 Cost of ending work in process $436238
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.
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Unit Cost and Cost Assignment, Nonuniform Inputs
Loran Inc. had the following equivalent units schedule and cost for its fabrication department during September:
| Materials | Conversion | ||
| Units completed | 180,000 | 180,000 | |
| Add: Units in ending WIP x Fraction complete | 79,000 | 51,350 | |
| (79,000 x 65%) | |||
| Equivalent units of output | 259,000 | 231,350 | |
| Costs: | |||
| Work in process, September 1: | |||
| Materials | $147,000 | ||
| Conversion costs | 7,875 | ||
| Total | $154,875 | ||
| Current costs: | |||
| Materials | $1,068,000 | ||
| Conversion costs | 289,055 | ||
| Total | $1,357,055 |
Required:
1. Calculate the unit cost for materials, for conversion, and in total for the fabrication department for September. If required, round your answers to the nearest cent.
| Unit materials cost | $4.69 |
| Unit conversion cost | $1.28 |
| Total unit cost | $5.97 |
2. Calculate the cost of units transferred out and the cost of EWIP. Round unit cost value to the nearest cent in intermediate calculations. If required, round final answers to the nearest dollar.
| Cost transferred out | $1074600 |
| Cost of ending work in process | $436238 |
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