Oat Company manufactures oatmeal for breakfast cereal. Direct materials are added at the beginning of the manufacturing process and conversion costs are incurred evenly throughout the manufacturing process. Data for the most recent period are as follows: Work in process, January 31 — 65,000 units, 40% completed for conversion costs Units started during February, 475,000 Work in process, February 28 — 40,000 units, 20% completed for conversion costs Calculate Oat Company’s physical flow of units, equivalent units, cost per equivalent unit and assign costs to Finished Goods and Ending Work-in-Process inventories using the FIFO method of process costing. Clearly indicate the costs assigned to inventory categories.
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.
Oat Company manufactures oatmeal for breakfast cereal. Direct materials are added at the beginning of the manufacturing process and conversion costs are incurred evenly throughout the manufacturing process. Data for the most recent period are as follows:
Work in process, January 31 — 65,000 units, 40% completed for conversion costs Units started during February, 475,000
Work in process, February 28 — 40,000 units, 20% completed for conversion costs
Calculate Oat Company’s physical flow of units, equivalent units, cost per equivalent unit and assign costs to Finished Goods and Ending Work-in-Process inventories using the FIFO method of
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