Victory Company uses weighted-average process costing to account for its production costs. The company has two production processes. Conversion cost is added evenly throughout each process. Direct materials are added at the beginning of the first process. Additional information for the first process follows. During November, the first process transferred 700,000 units of product to the second process. At the end of November, work in process inventory consists of 180,000 units that are 30% complete with respect to conversion. Beginning work in process inventory had $420,000 of direct materials and $139,000 of conversion cost. The direct material cost added in November is $2,220,000, and the conversion cost added is $3,254,000. Beginning work in process consisted of 60,000 units that were 100% complete with respect to direct materials and 80% complete with respect to conversion. Of the units completed, 60,000 were from beginning work in process and 640,000 units were started and completed during the period. Required For the first process: 1. Determine the equivalent units of production with respect to (a) direct materials and (b) conversion. 2. Compute both the direct material cost and the conversion cost per equivalent unit. 3. Compute the direct material cost and the conversion cost assigned to (a) units completed and transferred out and (b) ending work in process inventory.
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.
Victory Company uses weighted-average
has two production processes. Conversion cost is added evenly throughout each process. Direct materials
are added at the beginning of the first process. Additional information for the first process follows.
During November, the first process transferred 700,000 units of product to the second process. At the
end of November, work in process inventory consists of 180,000 units that are 30% complete with respect
to conversion. Beginning work in process inventory had $420,000 of direct materials and $139,000 of
conversion cost. The direct material cost added in November is $2,220,000, and the conversion cost added
is $3,254,000. Beginning work in process consisted of 60,000 units that were 100% complete with respect
to direct materials and 80% complete with respect to conversion. Of the units completed, 60,000 were
from beginning work in process and 640,000 units were started and completed during the period.
Required
For the first process:
1. Determine the equivalent units of production with respect to (a) direct materials and (b) conversion.
2. Compute both the direct material cost and the conversion cost per equivalent unit.
3. Compute the direct material cost and the conversion cost assigned to (a) units completed and transferred
out and (b) ending work in process inventory.
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