Old Victoria Inc produces top-quality stereos and uses process costing. The manufacture of stereos is such that direct materials, labor and overhead are all added evenly throughout the production process. Due to the smooth production process, only one cost category - manufactured costs - is used for equivalent unit calcualtions. Old Victoria had the following cost and production information available for the months of March and April. March April Direct materials cost $978,460 $1,168,310 Direct Labor costs 2,562,260 3,041,940 Manufacturing overhead applied 3,438,640 3,571,030 Total Manufacturing costs $6,979,360 $7,781,280 Units in beginning work in progress 7,000 4,800 Units transferred to finished goods 18,500 23,000 Units in ending work in process 4,800 6,400 Beginning work in process was 30% complete in March and 60% complete in April. Ending work in process was 60% complete in March and 35% complete in April. a. For each of the 2 months, calculate the equivalent units of production.
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.
Old Victoria Inc produces top-quality stereos and uses
| March | April | |
| Direct materials cost | $978,460 | $1,168,310 |
| Direct Labor costs | 2,562,260 | 3,041,940 |
| Manufacturing overhead applied | 3,438,640 | 3,571,030 |
| Total |
$6,979,360 | $7,781,280 |
| Units in beginning work in progress | 7,000 | 4,800 |
| Units transferred to finished goods | 18,500 | 23,000 |
| Units in ending work in process | 4,800 | 6,400 |
Beginning work in process was 30% complete in March and 60% complete in April. Ending work in process was 60% complete in March and 35% complete in April.
a. For each of the 2 months, calculate the equivalent units of production.
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