Petro Chemicals has a mixing department and a refining department. Its process costing system in the mixing department has two direct materials cost categories (Chemical X and Chemical Y) and one conversion costs pool. The following data pertains to the mixing department for October 2020: Work in process on October 1st. 2020 = zero Units started 100,000 Completed and transferred to refining = 70% of started Costs: Chemical X $600,000 Chemical Y = 23.33 of Chemical X Conversion costs= 257% of Chemical Y Chemical X is introduced at the start of operating in the mixing department and chemical Y is added when the product is 75% completed in the mixing department. Conversion costs are added evenly during the process. The ending WIP in the mixing department is 67% completed. Required: (A) Compute the equivalent units in the mixing department for Oct. 2020 for each cost category. (B) Compute the cost of goods completed and transferred to the refining department during Oct. 2020. (C) Compute the cost of WIP as of Oct. 2020
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.
Petro Chemicals has a mixing department and a refining department. Its
Work in process on October 1st. 2020 = zero
Units started 100,000
Completed and transferred to refining = 70% of started
Costs:
Chemical X $600,000
Chemical Y = 23.33 of Chemical X
Conversion costs= 257% of Chemical Y
Chemical X is introduced at the start of operating in the mixing department and chemical Y is added when the product is 75% completed in the mixing department. Conversion costs are added evenly during the process. The ending WIP in the mixing department is 67% completed.
Required:
(A) Compute the equivalent units in the mixing department for Oct. 2020 for each cost category.
(B) Compute the cost of goods completed and transferred to the refining department during Oct. 2020.
(C) Compute the cost of WIP as of Oct. 2020
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