) Maxion Jantaş is a manufactures of aluminum wheel for cars and they are currently producing wheels in their Manisa plant. During the production, wheels first go through assembly department and then proceed to testing department. The company is using a process costing system which has a single direct-cost category, direct materials, and a single indirect-cost category, conversion costs, for the assembly department. Conversion costs are added evenly during the process whereas direct materials are added at the beginning of the process. Furthermore, the company is using the weighted-average method of process costing. Data for the assembly department for August 2018 are as follows: Physical Units Direct Materials Conversion Costs Work in process, August 1° 5,000 $1,250,000 $402,750 Started during August 2018 20,000 Completed during August 2018 22,500 Work in process, August 31 2,500 Total costs added during August $4,500,000 2,337,500 2018 * Degree of completion: direct materials, ?%; conversion costs, 60% 'Degree of completion: direct materials, ?%; conversion costs, 70% 1. Calculate total costs assigned to completed and transferred out units and working process ending units using the current process costing method. (weighted average method) Show each step of the five-step approach and your calculations clearly. 2. Assume the company is using FIFO method of process costing. Calculate total costs assigned to completed and transferred out units and working process ending units using FIFO. Show each step of the five-step approach and your calculations clearly. 3. Explain any difference between the cost per equivalent unit in the assembly department under the weighted-average method and the FIFO method.
) Maxion Jantaş is a manufactures of aluminum wheel for cars and they are currently producing wheels in their Manisa plant. During the production, wheels first go through assembly department and then proceed to testing department. The company is using a process costing system which has a single direct-cost category, direct materials, and a single indirect-cost category, conversion costs, for the assembly department. Conversion costs are added evenly during the process whereas direct materials are added at the beginning of the process. Furthermore, the company is using the weighted-average method of process costing. Data for the assembly department for August 2018 are as follows: Physical Units Direct Materials Conversion Costs Work in process, August 1° 5,000 $1,250,000 $402,750 Started during August 2018 20,000 Completed during August 2018 22,500 Work in process, August 31 2,500 Total costs added during August $4,500,000 2,337,500 2018 * Degree of completion: direct materials, ?%; conversion costs, 60% 'Degree of completion: direct materials, ?%; conversion costs, 70% 1. Calculate total costs assigned to completed and transferred out units and working process ending units using the current process costing method. (weighted average method) Show each step of the five-step approach and your calculations clearly. 2. Assume the company is using FIFO method of process costing. Calculate total costs assigned to completed and transferred out units and working process ending units using FIFO. Show each step of the five-step approach and your calculations clearly. 3. Explain any difference between the cost per equivalent unit in the assembly department under the weighted-average method and the FIFO method.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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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Transcribed Image Text:2) Maxion Jantaş is a manufactures of aluminum wheel for cars and they are currently
producing wheels in their Manisa plant. During the production, wheels first go through
assembly department and then proceed to testing department. The company is using a
process costing system which has a single direct-cost category, direct materials, and a single
indirect-cost category, conversion costs, for the assembly department. Conversion costs
are added evenly during the process whereas direct materials are added at the beginning
of the process. Furthermore, the company is using the weighted-average method of
process costing. Data for the assembly department for August 2018 are as follows:
Physical Units
Direct Materials
Conversion Costs
Work in process, August 1°
5,000
$1,250,000
$402,750
Started during August 2018
20,000
Completed during August 2018
22,500
Work in process, August 31
2,500
Total costs added during August
$4,500,000
2,337,500
2018
* Degree of completion: direct materials, ?%; conversion costs, 60%
Degree of completion: direct materials, ?%; conversion costs, 70%
b
1. Calculate total costs assigned to completed and transferred out units and working
process ending units using the current process costing method. (weighted average
method) Show each step of the five-step approach and your calculations clearly.
2. Assume the company is using FIFO method of process costing. Calculate total costs
assigned to completed and transferred out units and working process ending units
using FIFO. Show each step of the five-step approach and your calculations clearly.
3. Explain any difference between the cost per equivalent unit in the assembly
department under the weighted-average method and the FIFO method.
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