Question 5 : Trendy Clothing, Inc. is a manufacturer of winter clothes. It has a knitting department and a finishing department. This exercise focuses on the finishing department. Direct materials are added at the end of the process. Conversion costs are added evenly during the process. Trendy uses the weightedaverage method of process costing. The following information for June 2017 is available. Home Insert Page Layout Formulas Data Review View C Physical Units Transferred-In Costs A Direct Conversion (tons) Materials Costs 2 Work in process, beginning inventory (June 1) 3 Degree of compleion, beginning work in process 4 Transferred-in during June 5 Completed and transferred out during June 6 Work in process, ending inventory (June 30) 7 Degree of completion, ending work in process 8 Total costs added during June 60 $ 60,000 $24,000 100% 0% 50% 100 120 40 100% 0% $27,000 $62,400 75% $117,000 Required: 1. Calculate the Finished Department's equivalent units of production for materials and conversion in July using weighted average method. 2. Summarize total costs to account for and assign total costs to units completed and transferred out, and to units in ending work in process.
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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