Process Costing System Questions: Q1. ABC Company produces one product through two stages of productions; the manufacturing and the assembly. Two DM are added during the manufacturing stage; DM A is added at the beginning of the process, and DM B is added at the 75% of completion. Conversion cost is added gradually. The following is data for cost and production during 2020: Data Units DM A DM B CC Beginning inventory (60%) 20,000 $160,000 $0 $60,000 Added units 80,000 $680,000 $300,000 $435,750 Ending Inventory (80%) 25,000 Required: Prepare the stage report for the manufacturing stage using, a) WA, and B) FIFO Journalize the required entry to transfer the completed units and prepare the ledger of the manufacturing stage.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Questions:
Q1. ABC Company produces one product through two stages of productions; the manufacturing and the assembly. Two DM are added during the manufacturing stage; DM A is added at the beginning of the process, and DM B is added at the 75% of completion. Conversion cost is added gradually. The following is data for cost and production during 2020:
|
Data |
Units |
DM A |
DM B |
CC |
|
Beginning inventory (60%) |
20,000 |
$160,000 |
$0 |
$60,000 |
|
Added units |
80,000 |
$680,000 |
$300,000 |
$435,750 |
|
Ending Inventory (80%) |
25,000 |
|
|
|
Required:
-
Prepare the stage report for the manufacturing stage using, a) WA, and B) FIFO
-
Journalize the required entry to transfer the completed units and prepare the ledger of the manufacturing stage.
Q2. ABC Company is a manufacturing company that produces biscuits covered with chocolates. The company has two stages; manufacturing stage where they add the biscuits at the beginning of the production. Then, they add chocolate when the production is ready by 60%. Second stage is the packaging stage where DM is added at the beginning of the process. The following is data of production and costs for both stages for Jan 2020 period:
|
Data |
Units |
Biscuits |
Chocolate |
CC |
|
Beginning inventory (70%) |
120,000 |
$18,000 |
$30,000 |
$8,400 |
|
Added units |
600,000 |
$96,000 |
$132,000 |
64,620 |
|
Ending Inventory (35%) |
150,000 |
|
|
|
|
Data |
Units |
DM |
CC |
Transferred C |
|
Beginning inventory (50%) |
75,000 |
$11,250 |
$3,000 |
$36,000 |
|
Added units |
|
$91,200 |
$52,875 |
|
|
Ending Inventory (60%) |
50,000 |
|
|
|
Required:
-
Prepare the stage report for the manufacturing and Packaging stages using, a) WA, and B) FIFO
-
Journalize the required entry to transfer the completed units and prepare the ledger of the manufacturing stage and Packaging stage.
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