Pitt Enterprises manufactures jeans. All materials are introduced at the beginning of the manufacturing process in the Cutting department. Conversion costs are incurred uniformly throughout the manufacturing process. As the cutting of material is completed, the pieces are immediately transferred to the Sewing department. Information for the Cutting department for the month of May follows. Units Direct materials Percent Complete Conversion Percent Complete Beginning work in process inventory 55,000 100% 45% Units started and completed 235,000 Units completed and transferred out 210,000 Ending work in process inventory 80,000 100% 15% Production cost information for the Cutting department follows: Beginning work in process Direct materials $ 80,500 Conversion 44,050 $ 124,550 Costs added this period Direct materials $ 404,200 Conversion 402,390 806,590 If Pitt Enterprises uses the FIFO method of process costing, compute the cost per equivalent unit for direct materials and conversion costs respectively for May.
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.
Pitt Enterprises manufactures jeans. All materials are introduced at the beginning of the manufacturing process in the Cutting department. Conversion costs are incurred uniformly throughout the manufacturing process. As the cutting of material is completed, the pieces are immediately transferred to the Sewing department. Information for the Cutting department for the month of May follows.
| Units | Direct materials Percent Complete | Conversion Percent Complete | |
|---|---|---|---|
| Beginning work in process inventory | 55,000 | 100% | 45% |
| Units started and completed | 235,000 | ||
| Units completed and transferred out | 210,000 | ||
| Ending work in process inventory | 80,000 | 100% | 15% |
Production cost information for the Cutting department follows:
| Beginning work in process | ||
|---|---|---|
| Direct materials | $ 80,500 | |
| Conversion | 44,050 | $ 124,550 |
| Costs added this period | ||
| Direct materials | $ 404,200 | |
| Conversion | 402,390 | 806,590 |
If Pitt Enterprises uses the FIFO method of
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