Pureform, Inc., manufactures a product that passes through two departments. Data for a recent month forthe first department follow:Units Materials Labor OverheadWork in process, beginning .............................. 5,000 $4,320 $1,040 $1,790Units started in process ................................... 45,000Units transferred out ........................................ 42,000Work in process, ending .................................. 8,000Cost added during the month ........................... $52,800 $21,500 $32,250The beginning work in process inventory was 80% complete with respect to materials and 60% complete with respect to labor and overhead. The ending work in process inventory was 75% complete withrespect to materials and 50% complete with respect to labor and overhead.Required:Assume that the company uses the weighted-average method of accounting for units and costs.1. Compute the equivalent units for the month for the first department.2. Determine the costs per equivalent unit for the month.
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.
Pureform, Inc., manufactures a product that passes through two departments. Data for a recent month for
the first department follow:
Units Materials Labor Overhead
Work in process, beginning .............................. 5,000 $4,320 $1,040 $1,790
Units started in process ................................... 45,000
Units transferred out ........................................ 42,000
Work in process, ending .................................. 8,000
Cost added during the month ........................... $52,800 $21,500 $32,250
The beginning work in process inventory was 80% complete with respect to materials and 60% complete with respect to labor and overhead. The ending work in process inventory was 75% complete with
respect to materials and 50% complete with respect to labor and overhead.
Required:
Assume that the company uses the weighted-average method of accounting for units and costs.
1. Compute the equivalent units for the month for the first department.
2. Determine the costs per equivalent unit for the month.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 5 images
