Mixing, Encapsulating, and Packaging. The following information of process inputs, outputs and work in process relates to the Encapsulating department for the month of April 2022: kg Opening work in process 26,700 Raw materials input 110,600 Output completed 98,400 Closing work in process 29,200
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.
Company manufactures a type of oral flu vaccine in capsules. These are produced in three separate departments sequentially: Mixing, Encapsulating, and Packaging. The following information of process inputs, outputs and work in process relates to the Encapsulating department for the month of April 2022:
kg
Opening work in process
26,700
Raw materials input
110,600
Output completed
98,400
Closing work in process
29,200
The opening and closing work in process are respectively 50 per cent and 70 per cent complete as to conversion costs.
Raw materials are added at the beginning of the manufacturing process. However, conversion costs are incurred evenly throughout the manufacturing process.
Spoilages are assumed to occur at the stage of completion where inspection takes place. All spoilages are assumed to be from units started during the month.
Inspection takes place when the products are 90% complete.
The opening work in process included the transferred-in costs of $200,250 from the Mixing department, raw material costs of $106,800 and conversion costs of $80,100.
Costs incurred during the period were:
Transferred-in costs, Mixing department
$553,000
Raw material input
$331,800
Conversion costs
$456,880
The normal spoilage is 3 per cent of the units inspected.
Question:
1 Calculate the cost of ending work in process in the Encapsulating department at the end of April.
2 Present all the necessary journal entries.
3 Assuming that the company uses weighted average method, use the 4-step approach to compute the cost of goods transferred to the Packaging department and the cost of ending work in process in the Encapsulating department at the end of April.
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