The cutting department of Legacy Production Company started 40,000 units of specialized chairs during the month of March. The department incurred $15,000 in direct material costs; 2,500 direct labor hours paid at $10 per hour; and manufacturing overhead applied at 150% of direct labor cost. Legacy Production Company uses process costing to accumulate costs. NOTE: There was no beginning inventory in March. Required (Excel Template downloadProvided): (Module Learning Outcomes LO5.1 through LO5.5 AND Course Learning Outcome #1 & #2) Calculate the conversion costs incurred during the month of March (show your calculations). Assume, that only 30,000 units were completed and transferred out. The remaining units left in ending inventroy are only 70% complete with respect to conversion costs. Direct materials are added at the beginning of the process. Prepare a Cutting Department cost production report for the month of March Refer to the cost production report in part b. What are the cost per equivalent unit with respect to direct materials and conversion costs, the total costs transferred out to the finished goods inventory, and the value of the cutting department inventory at the end of 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 cutting department of Legacy Production Company started 40,000 units of specialized chairs during the month of March. The department incurred $15,000 in direct material costs; 2,500 direct labor hours paid at $10 per hour; and manufacturing
Required (Excel Template downloadProvided): (Module Learning Outcomes LO5.1 through LO5.5 AND Course Learning Outcome #1 & #2)
- Calculate the conversion costs incurred during the month of March (show your calculations).
- Assume, that only 30,000 units were completed and transferred out. The remaining units left in ending inventroy are only 70% complete with respect to conversion costs. Direct materials are added at the beginning of the process. Prepare a Cutting Department cost production report for the month of March
- Refer to the cost production report in part b. What are the cost per equivalent unit with respect to direct materials and conversion costs, the total costs transferred out to the finished goods inventory, and the value of the cutting department inventory at the end of March.
- Refer to the cost of production report in part b, provide the
journal entry to record direct materials, direct labor and manufacturing overhead. Also provide the journal entry to record the transfer of goods out of WIP-Cutting Department and into WIP-Assembly Department.
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