Samantha's Office Supplies manufactures desk organizers in its Processing Department. Direct materials are included at the inception of the production cycle and must be bundled in single kits for each unit. Conversion costs are incurred evenly throughout the production cycle. Inspection takes place at the end of the production. Spoiled units generally constitute 8% of the good units. Data provided for March 2021 are as follows: Direct Conversion Physical Units Materials Costs 53,000 80% 50% Work in process, beginning (units) Started during current period 190,000 Good units completed and transferred out during current period: Normal spoilage as percentage of good units Work in process, ending (given) 200,000 8.0% 21,000 90% 30% Cost of Work in process, beginning Costs added in current period $290,000 $100,000 $412,880 $270,412 Degree of completion of normal spoilage Degree of completion of abnormal spoilage 100% 100% 100% 100% Required Using the FIFO method of process costing: a) Compute the equivalent units of work done in current period for direct material and conversion cost respectively.
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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