Massey Corporation uses a process cost system and the weighted average cost flow method. Production begins in the Fabricating Department where materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. On March 1, the beginning work in process inventory consisted of 20,000 units which were 60% complete and had a cost of P190,000, P145,000 of which was materials cost. During March, the following occurred: Materials added P305,000 Conversion costs incurred P120,000 Units completed and transferred out in March 50,000 Units in ending work in process March 31 (20% complete) 25,000 Instructions Answer the following questions and show the computations that support your answers. 1. What are the equivalent units of production for materials costs in the Fabricating Department for the month of March? 2. What are the costs assigned to the ending work in process inventory on March 31? 3. What are the costs assigned to units completed and transferred out during March?
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.
Massey Corporation uses a
Materials added P305,000
Conversion costs incurred P120,000
Units completed and transferred out in March 50,000
Units in ending work in process March 31 (20% complete) 25,000
Instructions
Answer the following questions and show the computations that support your answers.
1. What are the equivalent units of production for materials costs in the Fabricating Department for the month of March?
2. What are the costs assigned to the ending work in process inventory on March 31?
3. What are the costs assigned to units completed and transferred out during March?
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