Shirley Processing, Incorporated (SPI) makes adhesive tape. The following information on the physical flow of units and costs for month of March: Quantities Physical units Percentage Complete Materials Conversion Beginning work-in-process 118,000 100% 40% Started 962,500 To account for 1,080,500 Transferred out 986,500 100% 100% Ending work in process 94,000 100% 20% Accounted for 1,080,500 Cost Total Direct Materials Conversion Beginning work-in-process $ 208,570 $ 178,180 $ 30,390 Current period 2,094,818 1,347,500 747,318 Total $ 2,303,388 $ 1,525,680 $
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.
Shirley Processing, Incorporated (SPI) makes adhesive tape. The following information on the physical flow of units and costs for month of March:
| Quantities | Physical units | Percentage Complete | |
|---|---|---|---|
| Materials | Conversion | ||
| Beginning work-in-process | 118,000 | 100% | 40% |
| Started | 962,500 | ||
| To account for | 1,080,500 | ||
| Transferred out | 986,500 | 100% | 100% |
| Ending work in process | 94,000 | 100% | 20% |
| Accounted for | 1,080,500 |
| Cost | Total | Direct Materials | Conversion |
|---|---|---|---|
| Beginning work-in-process | $ 208,570 | $ 178,180 | $ 30,390 |
| Current period | 2,094,818 | 1,347,500 | 747,318 |
| Total | $ 2,303,388 | $ 1,525,680 | $ 777,708 |
Required:
- Compute the equivalent units for the conversion cost calculation for March assuming Shirley Processing, Incorporated uses the weighted-average method.
- Compute the cost per equivalent unit for direct materials and conversion costs for March assuming Shirley Processing, Incorporated uses the weighted-average method.
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