The Cutting Department of Karachi Carpet Company provides the following data for January. Assume that all materials are added at the beginning of the process. Work in process, January 1, 8,800 units, 80% completed $98,912* *Direct materials (8,800 × $7.80) $68,640 Conversion (8,800 × 80% × $4.30) 30,272 $98,912 Materials added during January from Weaving Department, 135,600 units $1,064,460 Direct labor for January 260,568 Factory overhead for January 318,472 Goods finished during January (includes goods in process, January 1), 137,200 units — Work in process, January 31, 7,200 units, 20% completed —
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.
Cost of Production Report
The Cutting Department of Karachi Carpet Company provides the following data for January. Assume that all materials are added at the beginning of the process.
| Work in process, January 1, 8,800 units, 80% completed | $98,912* | |
| *Direct materials (8,800 × $7.80) | $68,640 | |
| Conversion (8,800 × 80% × $4.30) | 30,272 | |
| $98,912 | ||
| Materials added during January from Weaving Department, 135,600 units | $1,064,460 | |
| Direct labor for January | 260,568 | |
| Factory |
318,472 | |
| Goods finished during January (includes goods in process, January 1), 137,200 units | — | |
| Work in process, January 31, 7,200 units, 20% completed | — |
a. Prepare a cost of production report for the Cutting Department. If an amount is zero or a blank, enter in "0". For the cost per equivalent unit computations, round your answers to two decimal places.
| Karachi Carpet Company | |||
| Cost of Production Report-Cutting Department | |||
| For the Month Ended January 31 | |||
| Unit Information | |||
| Units charged to production: | |||
| Inventory in process, January 1 | fill in the blank 0b798df72f84f93_1 | ||
| Received from Weaving Department | fill in the blank 0b798df72f84f93_2 | ||
| Total units accounted for by the Cutting Department | fill in the blank 0b798df72f84f93_3 | ||
| Units to be assigned costs: | |||
| Equivalent Units | |||
| Whole Units | Direct Materials | Conversion | |
| Inventory in process, January 1 | fill in the blank 0b798df72f84f93_4 | fill in the blank 0b798df72f84f93_5 | fill in the blank 0b798df72f84f93_6 |
| Started and completed in January | fill in the blank 0b798df72f84f93_7 | fill in the blank 0b798df72f84f93_8 | fill in the blank 0b798df72f84f93_9 |
| Transferred to finished goods in January | fill in the blank 0b798df72f84f93_10 | fill in the blank 0b798df72f84f93_11 | fill in the blank 0b798df72f84f93_12 |
| Inventory in process, January 31 | fill in the blank 0b798df72f84f93_13 | fill in the blank 0b798df72f84f93_14 | fill in the blank 0b798df72f84f93_15 |
| Total units to be assigned cost | fill in the blank 0b798df72f84f93_16 | fill in the blank 0b798df72f84f93_17 | fill in the blank 0b798df72f84f93_18 |
| Cost Information | |||
| Cost per equivalent unit: | |||
| Direct Materials | Conversion | ||
| Total costs for January in Cutting Department | $fill in the blank 0b798df72f84f93_19 | $fill in the blank 0b798df72f84f93_20 | |
| Total equivalent units | fill in the blank 0b798df72f84f93_21 | fill in the blank 0b798df72f84f93_22 | |
| Cost per equivalent unit | $fill in the blank 0b798df72f84f93_23 | $fill in the blank 0b798df72f84f93_24 | |
| Costs assigned to production: | |||
| Direct Materials | Conversion | Total | |
| Inventory in process, January 1 | $fill in the blank 0b798df72f84f93_25 | ||
| Costs incurred in January | fill in the blank 0b798df72f84f93_26 | ||
| Total costs accounted for by the Cutting Department | $fill in the blank 0b798df72f84f93_27 | ||
| Costs allocated to completed and partially completed units: | |||
| Inventory in process, January 1 balance | $fill in the blank 0b798df72f84f93_28 | ||
| To complete inventory in process, January 1 | $fill in the blank 0b798df72f84f93_29 | $fill in the blank 0b798df72f84f93_30 | fill in the blank 0b798df72f84f93_31 |
| Cost of completed January 1 work in process | $fill in the blank 0b798df72f84f93_32 | ||
| Started and completed in January | fill in the blank 0b798df72f84f93_33 | fill in the blank 0b798df72f84f93_34 | fill in the blank 0b798df72f84f93_35 |
| Transferred to finished goods in January | $fill in the blank 0b798df72f84f93_36 | ||
| Inventory in process, January 31 | fill in the blank 0b798df72f84f93_37 | fill in the blank 0b798df72f84f93_38 | fill in the blank 0b798df72f84f93_39 |
| Total costs assigned by the Cutting Department | $fill in the blank 0b798df72f84f93_40 | ||
a. How much more (percentage amount) needed to be done to the beginning work in process units to make the units complete to transfer to the next department? Did these units require more material cost or more conversion cost? How much, in terms of cost, had been done to these units in the prior period? In order for units to be transferred to the next department, the units have to be complete with respect to both materials and conversion. When are materials added in the process? How complete are the units in ending inventory with respect to materials? How complete are the units in ending inventory with respect to conversion? Materials and conversion cost needs to be allocated among the equivalent units. Are the numbers of equivalent units the same for materials and conversion?
b. Compute and evaluate the change in the costs per equivalent unit for direct materials and conversion from the previous month (December). If required, round your answers to two decimal places.
| Increase or Decrease | Amount | |
| Change in direct materials cost per equivalent unit |
|
$fill in the blank 2c37ddf71049fb8_2 |
| Change in conversion cost per equivalent unit |
|
$fill in the blank 2c37ddf71049fb8_4 |
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