Question 8.5 Downward Dog Yoga is a manufacturer of yoga apparel. It produces all of its products in one department. The information for the current month is as follows: Beginning work-in-process 20,000 units Units started 40,000 units Units completed 50,000 units Ending work-in-process 8,000 units Spoilage 2,000 units Beginning work-in-process direct materials $12,000 Beginning work-in-process conversion $4,000 Direct materials added during month $60,000 Direct manufacturing labour during month $20,000 Beginning work-in-process was half complete as to conversion. Direct materials are added at the beginning of the process. Factory overhead is applied at a rate equal to 50 percent of direct manufacturing labour. Ending work-in-process was 60 percent complete. All spoilage is normal and is detected at end of the process. Required: Prepare a production cost worksheet assuming that spoilage is recognized and the weighted-average method is used.
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.
Question 8.5
Downward Dog Yoga is a manufacturer of yoga apparel. It produces all of its products in one department. The information for the current month is as follows:
|
Beginning work-in-process |
20,000 units |
|
Units started |
40,000 units |
|
Units completed |
50,000 units |
|
Ending work-in-process |
8,000 units |
|
Spoilage |
2,000 units |
|
Beginning work-in-process direct materials |
$12,000 |
|
Beginning work-in-process conversion |
$4,000 |
|
Direct materials added during month |
$60,000 |
|
Direct manufacturing labour during month |
$20,000 |
Beginning work-in-process was half complete as to conversion. Direct materials are added at the beginning of the process. Factory overhead is applied at a rate equal to 50 percent of direct manufacturing labour. Ending work-in-process was 60 percent complete. All spoilage is normal and is detected at end of the process.
Required:
- Prepare a production cost worksheet assuming that spoilage is recognized and the weighted-average method is used.
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