Weighted Average Method, Unit Costs, Valuing Inventories Byford Inc. produces a product that passes through two processes. During November, equivalent units were calculated using the weighted average method: Units completed 190,000 Add: Units in EWIP X Fraction complete: (51,000 X 30%) 15,300 Equivalent units of output (weighted average) 205,300 Less: Units in BWIP X Fraction complete: (10,000 X 80%) 8,000 Equivalent units of output (FIFO) 197,300 The costs that Byford had to account for during the month of November were as follows: Beginning work in process $114,000 Costs added 1,179,390 Total $1,293,390 1. Using the weighted average method, determine unit cost. Round to the nearest cent.$per unit 2. Under the weighted average method, what is the total cost of units transferred out? What is the cost assigned to units in ending inventory? Cost of units transferred out $ Cost of ending inventory $ 3. Bill Johnson, the manager of Byford, is considering switching from weighted average to FIFO. Explain the key differences between the two approaches and make a recommendation to Bill about which method should be used. The weighted average method is to use than FIFO, but it does not reflect the unit cost as well if costs are changing significantly from one period to the next. calculates the unit cost using only costs of the current period and output of the current period. rolls back and picks up the costs and output in BWIP and counts them as if they belong to the current period. These costs and output of two periods are mixed. There is a significant difference in the unit cost of the prior period from the ,unit cost of the current period. If this type of cost fluctuation is typical, Byford should switch to Check My Work
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.
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Weighted Average Method, Unit Costs, Valuing Inventories
Byford Inc. produces a product that passes through two processes. During November, equivalent units were calculated using the weighted average method:
Units completed 190,000 Add: Units in EWIP X Fraction complete: (51,000 X 30%) 15,300 Equivalent units of output (weighted average) 205,300 Less: Units in BWIP X Fraction complete: (10,000 X 80%) 8,000 Equivalent units of output (FIFO) 197,300 The costs that Byford had to account for during the month of November were as follows:
Beginning work in process $114,000 Costs added 1,179,390 Total $1,293,390 1. Using the weighted average method, determine unit cost. Round to the nearest cent.
$per unit2. Under the weighted average method, what is the total cost of units transferred out? What is the cost assigned to units in ending inventory?
Cost of units transferred out $ Cost of ending inventory $ 3. Bill Johnson, the manager of Byford, is considering switching from weighted average to FIFO. Explain the key differences between the two approaches and make a recommendation to Bill about which method should be used.
The weighted average method is to use than FIFO, but it does not reflect the unit cost as well if costs are changing significantly from one period to the next. calculates the unit cost using only costs of the current period and output of the current period. rolls back and picks up the costs and output in BWIP and counts them as if they belong to the current period. These costs and output of two periods are mixed. There is a significant difference in the unit cost of the prior period from the ,unit cost of the current period. If this type of cost fluctuation is typical, Byford should switch to
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