Murray Chemical Company refines a variety of petrochemical products. These data are from the firm’s Houston plant: Work-in-process inventory, September 1 4,930,000 gallons Direct materials 50% completed Conversion 20% completed Units started in process during September 6,060,000 gallons Work-in-process inventory, September 30 2,570,000 gallons Direct materials 40% completed Conversion 60% completed Required: 1. Compute the equivalent units of direct materials and conversion for the month of September using the weighted-average method. 2. Compute the equivalent units of direct materials and conversion for the month of September using the FIFO method.
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.
Murray Chemical Company refines a variety of petrochemical products. These data are from the firm’s Houston plant:
| Work-in-process inventory, September 1 | 4,930,000 | gallons |
|---|---|---|
| Direct materials | 50% | completed |
| Conversion | 20% | completed |
| Units started in process during September | 6,060,000 | gallons |
| Work-in-process inventory, September 30 | 2,570,000 | gallons |
| Direct materials | 40% | completed |
| Conversion | 60% | completed |
Required:
1. Compute the equivalent units of direct materials and conversion for the month of September using the weighted-average method.
2. Compute the equivalent units of direct materials and conversion for the month of September using the FIFO method.
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