Problem no. 2 Fresh Seasons is a contract manufacturer for Delectable Dressing Company. Fresh Seasons uses a weighted average process costing system to account for its salad dressing production. All ingredients are added at the start of the process. Delectable provides reusable vats to Fresh Seasons for the completed product to be shipped to Delectable for bottling, so Fresh Seasons incurs no packaging costs. April 2010 production and cost information for Fresh Seasons is as follows: Gallons of dressing in beginning WIP Inventory Gallons completed during April Gallons of dressing in ending WIP Inventory Costs of beginning WIP Inventory Direct material Direct labor Overhead Costs incurred in April Direct material Direct labor for labor and overhead: $1,136,025 451,450 Overhead 723,195 April beginning and ending WIP inventories had the following percentages of completion Direct labor Overhead April 1 55% 70% 36,000 242,000 23,500 April 30 15% 10% $183,510 98,526 78,273
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.
Problem No. 2 (Cost Accounting)
Determine the following using the weighted average (WA) method of
1. Equivalent units of production for materials and conversion cost
2. unit costs, and;
3. Inventory values
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