Units to be accounted for: Work in process, April 1 (materials 90% complete; conversion 80% complete) Started into production 30,000 200,000 Total units to be accounted for 230,000 Units accounted for as follows: Transferred to next department 190,000 Work in process, April 30 (materials 75% complete; conversion 60% complete)... 40,000 Total units accounted for 230,000 Cost Reconciliation Cost to be accounted for: Work in process, April 1..... Cost added during the month $ 98,000 827,000 Total cost to be accounted for $925,000 Cost accounted for as follows: Work in process, April 30..... Transferred to next department. $119,400 805,600 Total cost accounted for ... $925,000
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.
Interpreting a Report—Weighted-Average Method
Cooperative San José of southern Sonora state in Mexico makes a unique syrup using cane sugar and local herbs. The syrup is sold in small bottles and is prized as a flavoring for drinks and for use in desserts. The bottles are sold for $12 each. The first stage in the production process is carried out in the Mixing Department, which removes foreign matter from the raw materials and mixes them in the proper proportions in large vats. The company uses the weighted-average method in its
A hastily prepared report for the Mixing Department for April appears below:
Management would like some additional information about Cooperative San José’s operations.
Required:
1. What were the Mixing Department’s equivalent units of production for materials and conversion for April?
2. What were the Mixing Department’s cost per equivalent unit for materials and conversion for April? The beginning inventory consisted of the following costs: materials, $67,800; and conversion cast, $30,200. The costs added during the month consisted of: materials, $579,000; and conversion cost, $248,000.
3. How many of the units transferred out of the Mixing Department in April were started and completed during that month?
4. The manager of the Mixing Department stated, “Materials prices jumped from about $2.50 per unit in March to $3 per unit in April, but due to good cost control I was able to hold our materials cost to less than $3 per unit for the month.” Should this manager be rewarded for good cost control? Explain.
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