The debits to Work in Process—Roasting Department for Morning Brew Coffee Company for August, together with information concerning production, are as follows:Work in process, August 1, 700 pounds, 20% completed $ 3,479**Direct materials (700 × $4.70) $3,290Conversion (700 × 20% × $1.35) 189 $3,479Coffee beans added during August, 14,300 pounds 65,780Conversion costs during August 21,942Work in process, August 31, 400 pounds, 42% completed ?Goods finished during August, 14,600 pounds ?All direct materials are placed in process at the beginning of production.a. Prepare a cost of production report, presenting the following computations:1. Direct materials and conversion equivalent units of production for August2. Direct materials and conversion costs per equivalent unit for August3. Cost of goods finished during August4. Cost of work in process at August 31b. Compute and evaluate the change in cost per equivalent unit for direct materials and conversion from the previous month (July).
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 debits to Work in Process—Roasting Department for Morning Brew Coffee Company for August, together with information concerning production, are as follows:
Work in process, August 1, 700 pounds, 20% completed $ 3,479*
*Direct materials (700 × $4.70) $3,290
Conversion (700 × 20% × $1.35) 189
$3,479
Coffee beans added during August, 14,300 pounds 65,780
Conversion costs during August 21,942
Work in process, August 31, 400 pounds, 42% completed ?
Goods finished during August, 14,600 pounds ?
All direct materials are placed in process at the beginning of production.
a. Prepare a cost of production report, presenting the following computations:
1. Direct materials and conversion equivalent units of production for August
2. Direct materials and conversion costs per equivalent unit for August
3. Cost of goods finished during August
4. Cost of work in process at August 31
b. Compute and evaluate the change in cost per equivalent unit for direct materials and conversion from the previous month (July).
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