The following information concerns production in the Baking Department for December. All direct materials are placed in process at the beginning of production. ACCOUNT Work in Process—Baking Department ACCOUNT NO. Date Item Debit Credit Balance Debit Credit Dec. 1 Bal., 4,500 units, 3/5 completed 8,955 31 Direct materials, 81,000 units 129,600 138,555 31 Direct labor 36,210 174,765 31 Factory overhead 20,364 195,129 31 Goods finished, 82,200 units 188,925 6,204 31 Bal., ? units, 2/5 completed 6,204 a. Based on the above data, determine each cost listed below. Round "cost per equivalent unit" answers to the nearest cent. 1. Direct materials cost per equivalent unit 1.6 2. Conversion cost per equivalent unit .7 3. Cost of the beginning work in process completed during December $fill in the blank 3 4. Cost of units started and completed during December $fill in the blank 4 5. Cost of the ending work in process 6204
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 following information concerns production in the Baking Department for December. All direct materials are placed in process at the beginning of production.
| ACCOUNT Work in Process—Baking Department | ACCOUNT NO. | |||||||
| Date | Item | Debit | Credit | Balance | ||||
| Debit | Credit | |||||||
| Dec. | 1 | Bal., 4,500 units, 3/5 completed | 8,955 | |||||
| 31 | Direct materials, 81,000 units | 129,600 | 138,555 | |||||
| 31 | Direct labor | 36,210 | 174,765 | |||||
| 31 | Factory |
20,364 | 195,129 | |||||
| 31 | Goods finished, 82,200 units | 188,925 | 6,204 | |||||
| 31 | Bal., ? units, 2/5 completed | 6,204 |
a. Based on the above data, determine each cost listed below. Round "cost per equivalent unit" answers to the nearest cent.
| 1. Direct materials cost per equivalent unit | 1.6 |
| 2. Conversion cost per equivalent unit | .7 |
| 3. Cost of the beginning work in process completed during December | $fill in the blank 3 |
| 4. Cost of units started and completed during December | $fill in the blank 4 |
| 5. Cost of the ending work in process | 6204 |
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Equivalent Units of Production
The work-in-process inventory at the end of an accounting period is referred to as equivalent units of production. It is the maximum number of finished units of a product that a business might have produced, based on the number of direct materials, direct labor, and manufacturing overhead costs incurred during that time for the unfinished goods. Since direct materials are typically added at the beginning of the production process while all other costs are incurred as the materials gradually move through the production process, equivalent units of production are typically stated separately for direct materials and all other manufacturing expenses. Because of this, direct material equivalent units are typically greater than equivalent units for other manufacturing costs.
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