Refining finished 274,000 units in September and transferred them to Packaging. At the end of September, there were 42,800 units in work-in-process inventory. The units were 20 percent complete with respect to conversion costs. The Refining Department uses the weighted-average method of process costing. The Mixing Department at the Grant Street Plant uses the FIFO method of process costing. If the Mixing Department at the plant had used the weighted-average method, the amount of costs transferred in from Mixing would have been $183,600 for the amount transferred in this month. Required: Prepare a production cost report for September for the Refining Department.
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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Edwina Industrial Products (EIP) manufactures cleaning products. The Grant Street Plant produces a single product in three departments: Mixing, Refining, and Packaging. Additional materials are added in the Refining Process when units are 40 percent complete with respect to conversion. Information for operations in September in the Refining process appear as follows.
Work in process on September 1 consisted of 27,800 units with the following costs:
| Amount | Degree of Completion | |
|---|---|---|
| Mixing costs transferred in | $ 16,200 | 100% |
| Costs added in Refining | ||
| Direct materials | $ 28,640 | 100% |
| Conversion costs | 31,630 | 80% |
| $ 60,270 | ||
| Work in process September 1 | $ 76,470 |
During September, 289,000 units were transferred in from Mixing at a cost of $166,093. The following costs were added in Refining in September.
| Direct materials | $ 450,200 |
|---|---|
| Conversion costs | 536,800 |
| Total costs added | $ 987,000 |
Refining finished 274,000 units in September and transferred them to Packaging. At the end of September, there were 42,800 units in work-in-process inventory. The units were 20 percent complete with respect to conversion costs.
The Refining Department uses the weighted-average method of
Required:
Prepare a production cost report for September for the Refining Department.
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