yt, Inc. has a process costing system at its Forest Street Plant. All materials are introduced when conversions cost reach 40 percent. The following is available for physical units during August: Units started in August = 163,000 Units transferred out to Finishing Department in August = 178,000 Work in progress, August 1 (85% complete as to conversion cost) = 41, 000 Work in progress, August 31 (25% complete as to conversion cost) = 26,000 Required Compute the equivalent units cost and for conversion cost using the
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.
COMPUTE EQUIVALENT UNITS: ETHICAL ISSUES
Hoyt, Inc. has a
Units started in August = 163,000
Units transferred out to Finishing Department in August = 178,000
Work in progress, August 1 (85% complete as to conversion cost) = 41, 000
Work in progress, August 31 (25% complete as to conversion cost) = 26,000
Required
- Compute the equivalent units cost and for conversion cost using the weighted average method. (Show the procedure and the mathematical formular.)
- Compute the equivalent units for material cost and for conversion costs using the FIFO method. (Show the procedure and the mathematical formular.)
- The company president has been under considerable pressure to increase income. He tells the controller to change the estimate completion for ending work in progress to 45 percent from 25 percent).
- What effect will this change have on the unit cost of units transferred to finished good in August? (Explain in 100 words)
- Would this be ethical? (Explain in 100 words)
- Is this likely to be a successful strategy for affecting income over a long period of time? (Explain in 100 words)
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