Problem 8. Nofat Company produces a product in three departments. The product is cut out of sheet metal in the Cutting Department, then transferred to the Forming Department, where it is bent to shape and certain parts purchased from outside vendors are added to the unit. Finally, the product is transferred to the Finishing Department where it is painted and packaged. The company uses a process costing system with an average cost flow assumption to account for its work in process inventories. Materials are added at two different stages in the Forming Department. Material A is added at the beginning of the process, and Material B is added at the end of the process. At the end of May, there were 600 units in process in the Forming Department, 50% complete as to labor and overhead. During June, 3,900 units were received from the cutting Department, and 4,100 units were completed and transferred to the Finishing Department. At the end of June, there were 400 units still in process in the Forming Department, 30% complete as to labor and overhead. Cost data related to June operations in the Forming Department partment, 30% compiere as w rations in the Forming Department Costs charged to the department Cost from preceding dept. Material A Material B Conversion cost Added this period P 67,410 21,200 16,400 17.650 Beginning Invty. P 9,090 4,000 1,340 P14,430 o P122,660 Requirements: 1. Equivalent production for Material A, Materials B and conversion cost > 2. Total costs of the units completed and transferred • 3. Total costs of the units in process, end
Problem 8. Nofat Company produces a product in three departments. The product is cut out of sheet metal in the Cutting Department, then transferred to the Forming Department, where it is bent to shape and certain parts purchased from outside vendors are added to the unit. Finally, the product is transferred to the Finishing Department where it is painted and packaged. The company uses a process costing system with an average cost flow assumption to account for its work in process inventories. Materials are added at two different stages in the Forming Department. Material A is added at the beginning of the process, and Material B is added at the end of the process. At the end of May, there were 600 units in process in the Forming Department, 50% complete as to labor and overhead. During June, 3,900 units were received from the cutting Department, and 4,100 units were completed and transferred to the Finishing Department. At the end of June, there were 400 units still in process in the Forming Department, 30% complete as to labor and overhead. Cost data related to June operations in the Forming Department partment, 30% compiere as w rations in the Forming Department Costs charged to the department Cost from preceding dept. Material A Material B Conversion cost Added this period P 67,410 21,200 16,400 17.650 Beginning Invty. P 9,090 4,000 1,340 P14,430 o P122,660 Requirements: 1. Equivalent production for Material A, Materials B and conversion cost > 2. Total costs of the units completed and transferred • 3. Total costs of the units in process, end
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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.
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Transcribed Image Text:Problem 8. Nofat Company produces a product in three departments. The product is cut out of
sheet metal in the Cutting Department, then transferred to the Forming Department, where it is
bent to shape and certain parts purchased from outside vendors are added to the unit. Finally,
the product is transferred to the Finishing Department where it is painted and packaged. The
company uses a process costing system with an average cost flow assumption to account for its
work in process inventories. Materials are added at two different stages in the Forming
Department. Material A is added at the beginning of the process, and MaterialB is added at the
end of the process. At the end of May, there were 600 units in process in the Forming
Department, 50% complete as to labor and overhead. During June, 3,900 units were received
from the cutting Department, and 4,100 units were completed and transferred
Department. At the end of June, there were 400 units still in process in the Forming Department,
30% complete as to labor and overhead. Cost data related to June operations in the Forming
the Finishing
Department
partment, 30% compiee as
rations in the Forming Department
Costs charged to the department Beginning Inyty.
Cost from preceding dept.
Material A
Material B
Conversion cost
Added this period
P 67,410
21,200
16,400
17.650
P 122,660
P 9,090
4,000
1,340
P14,430
Requirements:
1. Equivalent production for Material A, Materials B and conversion cost
• 2. Total costs of the units completed and transferred
• 3. Total costs of the units in process, end
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