🏷️ LIMITED TIME OFFER: GET 20% OFF GRADE+ YEARLY SUBSCRIPTION →
Log in
HomeClass Notes1,200,000AU40,000

ACF2200 Lecture Notes - Lecture 5: Weighted Arithmetic Mean

85 views7 pages
limeclam147
3 Aug 2018
School
Monash Caulfield
Department
Accounting
Course
ACF2200
Professor
Prabanga Thoradeniya

For unlimited access to Class Notes, a Class+ subscription is required.

Document Summary

First, estimate the cost of the production process. Secondly, calculate the average cost per unit by dividing the cost of the process by the number of units produced. Process costing can occur where there is no opening or closing wip inventory. More complex process costing accounts for wip inventory. Need to calculate equivalent units to apportion cost between new production and inventory. Process costing with wip: wip inventory: month (maybe at a different cost) have(cid:374)"s cosu(cid:373)ed all their costs yet) Not all products are complete at the begining (or the end) of an accounting period. Sometimes prodcution costs differ from month to month. So when wip exists, production costs should be calculated by taking into account. Units started in the previous month (begining wip) and completed in the current. Units started and completed during the current month. Product are costed using one of two assumptions about product fllow: The differences of weighted average and fifo.

Get access

Grade+20% off
$8 USD/m$10 USD/m
Billed $96 USD annually
Grade+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
40 Verified Answers
Class+
$8 USD/m
Billed $96 USD annually
Class+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
30 Verified Answers

Related Questions

Regal Polish manufactures a single product in one department anduses a process costing system. At the start of May, there were10,800 units in process that were 100 percent complete with respectto direct material and 70 percent complete with respect toconversion costs (labor and overhead). During the month, thecompany began production of 108,800 units. Ending Work in Processinventory consisted of 5,040 units that were 100 percent completewith respect to material and 70 percent complete with respect toconversion costs

cost info beginning WIP Costs added in may
Direct Material $3,820 $71500
Direct Labor 130 8030
maufacturing Overhead 380 9400
total $4330 88930

Question 1. Calculate the cost per equivalent unit for each ofthe three cost items and in total.

Material:

labor:

Overhead:

Total:

question 2

Calculate the cost of items completed in May and the cost ofending Work in Process

cost of items completed in may:

cost of ending WIP:

question 3

Reconcile the sum of the two costs in part b to the sum ofbeginning Work in Process and costs added in May

Beginning WIP:

Cost added:

total:

cost of items completed:

cost of ending WIP:

total:

Douglas Toys is a manufacturer that uses FIFO costing method toaccount for costs of production. It produces a plastic toy in threeseparate departments: Molding, Assembling, and Finishing. Thefollowing information was obtained for the Assembling Departmentfor the month of September.

Work in process on September 1 had120,000 units made up of the following:

Amount Degree ofCompletion
Prior departmentcosts transferred in from the Molding Department $ 178,800 100 %
Costs added by theAssembling Department
Direct materials $ 100,800 100 %
Direct labor 53,920 70 %
Manufacturing overhead 32,520 50 %
$ 187,240
Work in process,September 1 $ 366,040

During September, 520,000 unitswere transferred in from the Molding Department at a cost of$774,800. The Assembling Department added the following costs:

Directmaterials $ 418,320
Direct labor 256,000
Manufacturingoverhead 161,880
Total costsadded $ 836,200
Assembling finished 420,000units and transferred them to the Finishing Department.

At September 30, 220,000 unitswere still in work-in-process inventory. The degree of completionof work-in-process inventory at September 30 was as follows:

Direct materials90%

Directlabor80

Manufacturingoverhead30

Required:
(a)

Prepare a production cost report using FIFO. (Round youranswer to 2 decimal places.)

DOUGLAS TOYS
Assembling Department
Production Cost Report—FIFO
Flow of Production Units COMPUTE EQUIVALENT UNITS
Physical Units Prior Department Costs Materials Labor Manufacturing Overhead
Units tobe accounted for:
BeginningWIP inventory
Unitsstarted this period
Totalunits to be accounted for 0
Unitsaccounted for:
Unitscompleted and transferred out:
Frombeginning inventory
Startedand completed currently
Units inending WIP inventory
Totalunits accounted for 0 0 0 0 0
Costs DETAILS
Total Costs Prior Department Costs Materials Labor Manufacturing Overhead
Costs tobe accounted for:
Costs inbeginning WIP inventory
Currentperiod costs
Totalcosts to be accounted $0 $0 $0 $0 $0
Cost perequivalent unit:
Priordepartment costs
Materials
Labor
Manufacturing overhead
DETAILS
Total Costs Prior Department Costs Materials Labor Manufacturing Overhead
Costsaccounted for:
Costsassigned to units transferred out:
Costsfrom beginning WIP inventory
Currentcosts added to complete beginning WIP inventory:
Priordepartment costs
Materials
Labor
Manufacturing overhead
Totalcosts from beginning inventory $0
Currentcosts of units started and completed:
Priordepartment costs
Materials
Labor
Manufacturing overhead
Totalcosts of units started and completed $0
Totalcosts of units transferred out $0
Costsassigned to ending WIP inventory:
Priordepartment costs
Materials
Labor
Manufacturing overhead
Totalending WIP inventory $0
Total costs accounted for $0 $0 $0 $0 $0

Falcon Incorporated procures fish and then makes them into fillets and then prepares the fish fillets for distribution. Direct materials are added at the initiation of the cycle. Conversion costs are incurred evenly throughout the production cycle. Before inspection, some fillets are spoiled due to non-detectible defects. Inspection occurs when units are 50% converted. Spoiled fillets generally constitute 5% of the good fillets. Falcon utilizes the First-In, First-Out Method of Process Costing. The records from June 2018 indicate the following:

WIP, beginning inventory 6/1/2018 75,000 fillets
Direct materials (100% complete)
Conversion costs (40% complete)
Started during June 153,950 fillets
Completed and transferred out 6/30/2018 115,000 fillets
WIP, ending inventory 6/30/2018 32,000 fillets
Direct materials (100% complete)
Conversion costs (20% complete)

Costs for June:
WIP, beginning Inventory:
Direct materials $ 150,000
Conversion costs 97,910
Direct materials added 305,000
Conversion costs added 393,130

a) What is the number of total spoiled units?
b) Normal spoilage units totals ________
c) Abnormal spoilage units totals ________
d) What is the total cost per equivalent unit using the first-in first-out method of process costing for Direct Materials?
e) What cost is allocated to abnormal spoilage using the first-in first-out process-costing method?
f) What is the amount of direct materials and conversion costs assigned to ending work in process using the first-in first-out process-costing method?