Weatherly Lumber Company processes wood pulp for manufacturing various paper products. The company employs a process costing system for its manufacturing operations. All direct materials are added at the beginning of the process, and conversion costs are incurred uniformly throughout the process. This is the company’s production schedule for May: Percent Completed Tons of Pulp Materials Conversion Work-in-Process Inventory, May 1 3,000 100 % 50 % Started during May 14,000 Units to account for 17,000 Units from beginning Work-in-Process, which were completed and transferred out during May 3,000 Started and completed during May 8,400 Work-in-Process Inventory, May 31 5,600 100 % 50 % Total units accounted for 17,000 The following cost data are available: Work-in-Process Inventory, May 1 Direct materials $ 47,640 Conversion 116,202 Costs incurred during May Direct materials 217,560 Conversion 255,270 Required: 1. Calculate the equivalent units of direct materials and conversion during May. Use the FIFO method. 2. Calculate the cost per equivalent unit for both direct materials and conversion during May. Use the FIFO method What are the answers/how do you get them?
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.
Weatherly Lumber Company processes wood pulp for manufacturing various paper products. The company employs a
| Percent Completed | |||||
| Tons of Pulp | Materials | Conversion | |||
| Work-in-Process Inventory, May 1 | 3,000 | 100 | % | 50 | % |
| Started during May | 14,000 | ||||
| Units to account for | 17,000 | ||||
| Units from beginning Work-in-Process, which were completed and transferred out during May |
3,000 | ||||
| Started and completed during May | 8,400 | ||||
| Work-in-Process Inventory, May 31 | 5,600 | 100 | % | 50 | % |
| Total units accounted for | 17,000 | ||||
The following cost data are available:
| Work-in-Process Inventory, May 1 | |||
| Direct materials | $ | 47,640 | |
| Conversion | 116,202 | ||
| Costs incurred during May | |||
| Direct materials | 217,560 | ||
| Conversion | 255,270 | ||
Required:
1. Calculate the equivalent units of direct materials and conversion during May. Use the FIFO method.
2. Calculate the cost per equivalent unit for both direct materials and conversion during May. Use the FIFO method
What are the answers/how do you get them?
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