The Blacksmith’s Cabin has two main processes, forging and packaging. Material is introduced at the start of both processes and conversion costs are applied uniformly throughout. Data for March are as follows: Forging Packaging Opening work in process 6,000 units that are 60% converted, comprising materials $72,000 and conversion cost $45,900 2,000 units that are 80% converted, comprising previous process cost of $91,800, materials $12,000 and conversion costs $38,400 Units started during the period 16,000 18,000 Closing work in process 4,000 units that are 75% complete 8,000 units that are 50% complete Materials costs incurred during the period 192,000 60,000 Conversion costs incurred during the period 225,000 259,200 Required: Using the first-in first-out (FIFO) method, calculate the following for the forging process: 1. The cost per equivalent unit. 2. The cost of goods completed and transferred out during March. 3. The cost of the 31 March work in process inventory. 4. Prepare a journal entry to record the transfer of the cost of goods completed and transferred out during March.
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.
The Blacksmith’s Cabin has two main processes, forging and packaging. Material is introduced at the start of both processes and conversion costs are applied uniformly throughout. Data for March are as follows:
| Forging | Packaging | |
| Opening work in process | 6,000 units that are 60% converted, comprising materials $72,000 and conversion cost $45,900 | 2,000 units that are 80% converted, comprising previous |
| Units started during the period | 16,000 | 18,000 |
| Closing work in process | 4,000 units that are 75% complete | 8,000 units that are 50% complete |
| Materials costs incurred during the period | 192,000 | 60,000 |
| Conversion costs incurred during the period | 225,000 | 259,200 |
Required:
Using the first-in first-out (FIFO) method, calculate the following for the forging process:
1. The cost per equivalent unit.
2. The cost of goods completed and transferred out during March.
3. The cost of the 31 March work in process inventory.
4. Prepare a
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