Work in Process Account Data for Two Months; Cost of Production Reports Pittsburgh Aluminum Company uses a process cost system to record the costs of manufacturing rolled aluminum, which consists of the smelting and rolling processes. Materials are entered from smelting at the beginning of the rolling process. The inventory of Work in Process—Rolling on September 1, and debits to the account during September were as follows: Bal., 2,600 units, ¼ completed: Direct materials (2,600 x $15.50) $40,300 Conversion (2,600 x ¼ x $8.50) 5,525 $45,825 From Smelting Department, 28,900 units 462,400 Direct labor 158,920 Factory overhead 101,402 During September, 2,600 units in process on September 1 were completed, and of the 28,900 units entering the department, all were completed except 2,900 units that were 4/5 completed. Charges to Work in Process—Rolling for October were as follows: From Smelting Department, 31,000 units $511,500 Direct labor 162,850 Factory overhead 104,494 During October, the units in process at the beginning of the month were completed, and of the 31,000 units entering the department, all were completed except 2,000 units that were 2/5 completed. Required: 1. Enter the balance as of September 1, in a four-column account for Work in Process—Rolling. Record the debits and the credits in the account for September. Construct a cost of production report and present computations for determining (a) equivalent units of production for materials and conversion, (b) costs per equivalent unit, (c) cost of goods finished, differentiating between units started in the prior period and units started and finished in September, and (d) work in process inventory. If an amount box does not require an entry, leave it blank. 2. Provide the same information for October by recording the October transactions in the four-column work in process account. Construct a cost of production report, and present the October computations (a through d) listed in part (1). If an amount box does not require an entry, leave it blank. 3. The cost per equivalent unit for direct materials from August to October. The cost per equivalent unit for conversion costs from August to October. These changes be investigated for their underlying causes, and any necessary corrective actions should be taken.
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.
Work in Process Account Data for Two Months; Cost of Production Reports
Pittsburgh Aluminum Company uses a
| Bal., 2,600 units, ¼ completed: | ||
| Direct materials (2,600 x $15.50) | $40,300 | |
| Conversion (2,600 x ¼ x $8.50) | 5,525 | |
| $45,825 | ||
| From Smelting Department, 28,900 units | 462,400 | |
| Direct labor | 158,920 | |
| Factory |
101,402 |
During September, 2,600 units in process on September 1 were completed, and of the 28,900 units entering the department, all were completed except 2,900 units that were 4/5 completed.
Charges to Work in Process—Rolling for October were as follows:
| From Smelting Department, 31,000 units | $511,500 |
| Direct labor | 162,850 |
| Factory overhead | 104,494 |
During October, the units in process at the beginning of the month were completed, and of the 31,000 units entering the department, all were completed except 2,000 units that were 2/5 completed.
Required:
1. Enter the balance as of September 1, in a four-column account for Work in Process—Rolling. Record the debits and the credits in the account for September. Construct a cost of production report and present computations for determining (a) equivalent units of production for materials and conversion, (b) costs per equivalent unit, (c) cost of goods finished, differentiating between units started in the prior period and units started and finished in September, and (d) work in process inventory. If an amount box does not require an entry, leave it blank.
2. Provide the same information for October by recording the October transactions in the four-column work in process account. Construct a cost of production report, and present the October computations (a through d) listed in part (1). If an amount box does not require an entry, leave it blank.
3. The cost per equivalent unit for direct materials from August to October. The cost per equivalent unit for conversion costs from August to October. These changes be investigated for their underlying causes, and any necessary corrective actions should be taken.
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