Madad Company had the following production and cost information for its blending department during February (with materials added at the beginning of the process): Table 2: Cost and Production Data for the Blending Department for February Production: Units in process February 1, 50% complete with respect to conversion 2,000 Units completed 13,000 Units in process, February 28, 60% complete 2,400 Costs: RM Work In Process, February 1 16,000 Materials 12,000 Conversion costs 28,000 Current Costs: Materials 50,000 Conversion costs 84,000 Total 134,000
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.
- Madad Company had the following production and cost information for its blending department during February (with materials added at the beginning of the process):
Table 2: Cost and Production Data for the Blending Department for February
|
Production: |
|
|
Units in process February 1, 50% complete with respect to conversion |
2,000 |
|
Units completed |
13,000 |
|
Units in process, February 28, 60% complete |
2,400 |
|
Costs: |
RM |
|
Work In Process, February 1 |
16,000 |
|
Materials |
12,000 |
|
Conversion costs |
28,000 |
|
Current Costs: |
|
|
Materials |
50,000 |
|
Conversion costs |
84,000 |
|
Total |
134,000 |
Madad Company had uses the weighted average method.
Required:
- Develop an equivalent units schedule.
- Calculate the unit cost.
- Calculate the costs of units transferred out and the cost of EWIP.
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