The costs per equivalent unit of direct materials and conversion in the Rolling Department of Oak Ridge Steel Company are $1.00 and $2.50, respectively. The equivalent units to be assigned costs are as follows: Equivalent Units Inventory in process, July 1 Started and completed during July Transferred out of Rolling (completed) Inventory in process, July 31 Total units to be assigned costs Direct Materials 0 31,000 31,000 3,000 34,000 Conversion 1,200 31,000 32,200 1000 900 33,100 The beginning work in process inventory on July 1 had a cost of $700. Determine the cost of completed and transferred-out production, the ending work in process inventory, and the total costs assigned by the Rolling Department. Completed and transferred-out production. Inventory in process, ending Total costs assigned by the Rolling 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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Cost of units completed and transferred out is the sum of costs of beginning inventory, costs to complete beginning inventory and costs of units started and completed. Costs to complete beginning inventory is calculated by multiplying costs per equivalent unit by number of equivalent units in beginning inventory. Costs of units started and completed is calculated by multiplying costs per equivalent unit by number of equivalent units started and completed. The cost of ending work in process is calculated by multiplying number of equivalent units in ending inventory by costs per equivalent unit.
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