Weighted Average Method, Unit Cost, Valuing Inventories Cassien Inc. manufactures products that pass through two or more processes. During June, equivalent units were computed using the weighted average method: Units completed 53,400 Units in EWIP X Fraction complete (36,000 X 60%) 21,600 Equivalent units of output 75,000 June's costs to account for are as follows: BWIP (10,000 units, 80% complete) $50,000 Materials 90,000 Conversion costs 34,000 Total $174,000 Required: 1. Calculate the unit cost for June using the weighted average method. Round your answer to the nearest cent. $ per unit 2. Using the weighted average method, determine the cost of EWIP and the cost of the goods transferred out. If required, round your answers to the nearest dollar. Cost of ending work in process $ Cost of the goods transferred out $ 3. Cassien had just finished implementing a series of measures designed to reduce the unit cost to $2.00 and was assured that this had been achieved and should be realized for June’s production. Yet, upon seeing the unit cost for June, the president of the company was disappointed. Can you explain why the full effect of the cost reductions may not show up in June? What can you suggest to overcome this problem?
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.
Weighted Average Method, Unit Cost, Valuing Inventories
Cassien Inc. manufactures products that pass through two or more processes. During June, equivalent units were computed using the weighted average method:
| Units completed | 53,400 |
| Units in EWIP X Fraction complete (36,000 X 60%) | 21,600 |
| Equivalent units of output | 75,000 |
| June's costs to account for are as follows: | |
| BWIP (10,000 units, 80% complete) | $50,000 |
| Materials | 90,000 |
| Conversion costs | 34,000 |
| Total | $174,000 |
Required:
1. Calculate the unit cost for June using the weighted average method. Round your answer to the nearest cent.
$ per unit
2. Using the weighted average method, determine the cost of EWIP and the cost of the goods transferred out. If required, round your answers to the nearest dollar.
| Cost of ending work in process | $ |
| Cost of the goods transferred out | $ |
3. Cassien had just finished implementing a series of measures designed to reduce the unit cost to $2.00 and was assured that this had been achieved and should be realized for June’s production. Yet, upon seeing the unit cost for June, the president of the company was disappointed. Can you explain why the full effect of the cost reductions may not show up in June? What can you suggest to overcome this problem?
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