The document discusses two methods for calculating equivalent units of production: weighted average and first-in, first-out (FIFO). The weighted average method considers beginning inventory but not the stage of completion, while the FIFO method fully considers beginning and ending inventory stages of completion. Equivalent units represent the quantity of fully completed units when accounting for partially completed units. The FIFO method formula calculates equivalent units as beginning units to complete plus units started and finished plus equivalent units in ending inventory.
Equivalent production in Cost Accounting Sanjeet Yadav
The above slide covers meaning, definition, methods of calculation of Work in Progress (FIFO, LIFO and average cost methods) and procedure of valuation of work in progress in Equivalent production (Concept of Cost Accounting).
Equivalent production in Cost Accounting Sanjeet Yadav
The above slide covers meaning, definition, methods of calculation of Work in Progress (FIFO, LIFO and average cost methods) and procedure of valuation of work in progress in Equivalent production (Concept of Cost Accounting).
Process costing explained with examples free of cost .It is for students of managerial accounting ,read this to quickly go through process costing.
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Process costing explained with examples free of cost .It is for students of managerial accounting ,read this to quickly go through process costing.
http://www.brightscholarships.com
Twitter @scholarshipskys
ACG 2071 Managerial Accounting Process Costing Systems .docxbobbywlane695641
ACG 2071 Managerial Accounting
Process Costing Systems
Minicase
PROCESS COSTING PROBLEM
Spectre Chemicals produces Zaloff in a two department process. Information on the two
departments for March and April, 2011 are as follows:
March 2011:
Department 1: The company had beginning inventory of 6,000 units, 40% completed with a
cost of $45,000. During the month, the department transferred in 22,000 units of the direct
materials with a cost of $10 per unit. Ending inventory was 7,000 units, 30% completed.
Direct labor is $310,500 and factory overhead is $103,500.
Department 2: The company had beginning inventory of 5,000 units, 70% completed with a
cost of $80,000. During the month, direct labor was $175,000 and factory overhead was
$87,500. Ending inventory was 10,000 units, 50% completed.
April 2011:
Department 1: During the month, the department transferred in 20,000 units of the direct
materials with a cost of $11 per unit. Direct labor is $209,000 and factory overhead is
$104,500. Ending inventory is 10,000 units 60% completed.
Department 2: The company had beginning inventory of 5,000 units, 70% completed with a
cost of $80,000. During the month, direct labor is $175,000 and factory overhead is
$87,500.
Required:
Compute the Equivalent Units of Production, Material costs, and Conversion costs for each
department for March and April, 2011.
Complete the attached chart – one for each department and each month
Prepare a cost of production report for March and April 2011.
ACG 2071
Process Cost Systems
Created by: M. Mari
Fall 2009-1
Page 1 of 13
Process Manufacturing
Is the mass production of products in a continuous flow
of steps
Products pass through a series of sequential processes
Each process is identified a separate production,
department, workstation, or work center.
With the exception of the first process or department,
each receives the output from the prior department as
a partially processed product.
Depending on the nature of the process, a company
applies direct labor, overhead, and additional direct
materials to move the product toward completion.
Process Cost System
Assigns direct materials, direct labor, and overhead
to specific processes.
Costs are allocated by department rather than jobs
Manufacturing costs are allocated to products based
on units of production
Manufacturing costs are accumulated and transferred
by department
The total costs associated with each process are then
divided by the number of units passing through that
process to determine the cost per equivalent units
for that process
ACG 2071
Process Cost Systems
Created by: M. Mari
Fall 2009-1
Page 2 of 13
To understand how costs are allocated, first we must decide
how the costs are accumulated. One method is First in, First
out method.
Beverage Production
Costs flow fr.
| Managerial Accounting | Chapter 4 | Systems Design: Process Costing | Intro...Ahmad Hassan
Chapter 4: systems design: process costing – types of costing systems used to determine product costs, differences between job-order and process costing, sequential processing departments, parallel processing departments, flow of materials, labor and overhead costs, materials, labor and overhead costs entries, equivalent units of production, weighted average method, production report, product report example.
P16A-17BP16a.17bPage 898Example of the time line from page 882 of .docxalfred4lewis58146
P16A-17BP16a.17bPage 898Example of the time line from page 882 of the textRequirement 1. Fill-in the time line for Sue Electronics.Conversion CostsStartCompleteCompleteRequirement 2. Compute the equivalent units in the Assembly Department for April. (For entries with a 0 balance, make sure to enter"0" in the appropriate column.Sue ElectronicsAssembly DepartmentEquivalent Unit ComputationMonth Ended April 30Equivalent UnitsFlow of ProductionFlow of Physical UnitsDirect Materials Conversion CostsUnits accounted for: Completed and transferred out Ending work in process, April 30Total physical units accounted for$ -Equivalent units$ -$ -Compute the costs per equivalent unit in the Assembly Department for April. (For entries with $0 balance, make sure to enter "0"in the appropriate column. Round the cost per equivalent unit to two decimal places.)Sue ElectronicsAssembly DepartmentCost per Equivalent UnitMonth Ended April 30Flow of ProductionDirect Materials Conversion CostsBeginning work in process$ -$ -Costs added during AprilDivide by equivalent unitsCost per equivalent unitERROR:#DIV/0!ERROR:#DIV/0!Requirement 3. Assign total costs in the Assembly department to (a) units completed and transferred out to Programming and (b)units still in process at April 30. (Round your answers to the nearest whole dollar. Enter the cost per equivalent unit amounts in thesame order as calculated in the preceding step.)Sue ElectronicsAssembly DepartmentCost AssignmentMonth Ended April 30Assign Costs:Direct MaterialsConversion CostsTotal a. Completed and transferred out=$76,100 X (3.76 + 2.99)ERROR:#DIV/0! b. Ending work in process, April 30 Direct materials=$23,99 X 3.76ERROR:#DIV/0! Conversion costs=$9560 X 2.99ERROR:#DIV/0! Total ending work in process inventory, April 30ERROR:#DIV/0! Total cost accounted forERROR:#DIV/0!Requirement 4. Prepare a T-account for Work in process inventory--Assembly to show activity during April, including theApril 30 balance. (Leave unused cells blank.)Work in process inventory -- AssemblyBal, March 310Transferred to ProgrammingERROR:#DIV/0!Directy materials$ -Direct laborManufacturing overheadBal, April 30ERROR:#DIV/0!
Sue Electronics makes CD players in three processes: assembly, programming, and packaging. Direct materials are added at the
beginning of the assembly process. Conversion costs are incurred evenly throughout the process. The Assembly Department had
no Work in process on March 31. In mid-April, Sue Electronics started production on 100,000 CD players. Of this number 76,100
CD players were assembled during April and transferred out ot the Programming Department. The April 30 Work in process in the
Assembly Department was 40% of the way through the assembly process. Direct materials costing $375,720 were placed in
production in Assembly during April, and direct labor of $157,700 and manufacturing overhead of $98,505 were assigned to that
department.
Requirements
1. Draw a time.
Acetabularia Information For Class 9 .docxvaibhavrinwa19
Acetabularia acetabulum is a single-celled green alga that in its vegetative state is morphologically differentiated into a basal rhizoid and an axially elongated stalk, which bears whorls of branching hairs. The single diploid nucleus resides in the rhizoid.
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Antifertility, Toxicity studies as per OECD guidelines
Normal Labour/ Stages of Labour/ Mechanism of LabourWasim Ak
Normal labor is also termed spontaneous labor, defined as the natural physiological process through which the fetus, placenta, and membranes are expelled from the uterus through the birth canal at term (37 to 42 weeks
Operation “Blue Star” is the only event in the history of Independent India where the state went into war with its own people. Even after about 40 years it is not clear if it was culmination of states anger over people of the region, a political game of power or start of dictatorial chapter in the democratic setup.
The people of Punjab felt alienated from main stream due to denial of their just demands during a long democratic struggle since independence. As it happen all over the word, it led to militant struggle with great loss of lives of military, police and civilian personnel. Killing of Indira Gandhi and massacre of innocent Sikhs in Delhi and other India cities was also associated with this movement.
Introduction to AI for Nonprofits with Tapp NetworkTechSoup
Dive into the world of AI! Experts Jon Hill and Tareq Monaur will guide you through AI's role in enhancing nonprofit websites and basic marketing strategies, making it easy to understand and apply.
Macroeconomics- Movie Location
This will be used as part of your Personal Professional Portfolio once graded.
Objective:
Prepare a presentation or a paper using research, basic comparative analysis, data organization and application of economic information. You will make an informed assessment of an economic climate outside of the United States to accomplish an entertainment industry objective.
1. Equivalent Units of Production:
Definition and Explanation of Equivalent Units of Production:
After materials, labor and overhead costs have been accumulated in a department, the department's output must be
determined so that unit cost can be computed. A department usually has some partially completed units in its ending
inventory. It does not seem reasonable to count these partially completed units as equivalent to fully completed units
when counting the department's output. These partially converted units are mathematically converted into
an equivalent number of fully completed units. In process costing this is done by using the following formula:
Equivalent Units = Number of partially Completed Units × Percentage of Completion
Equivalent units of production for a period can be calculated in two different ways
1. Weighted Average method
2. First in First Out (FIFO) method
Equivalent Units―Weighted Average Method:
Weighted Average method blends together units and costs from the current period with units and costs from the prior
period. In a weighted average method the equivalent units of production for a department are the number of units
transferred to the next department of finished goods plus the equivalent units in the department's ending work in
process inventory.
Example:
Following is the data from Shaping and Milling department, one of the departments at Norton Company
Percent Complete
Shaping and Milling Department
Units Materials Conversion
Work in process, May 1 200 55% 30%
Units started in production during May 5,000
Units completed in May and transferred to the next department 4,800 100%* 100%*
Work in Process, May31 400 40% 25%
*It is always assumed that units transferred out of a department are 100% complete with respect to the processing
done in that department.
Note that the May1 beginning Work in Process is 55% complete with respect to materials costs, and 30% complete
with respect to conversion costs. This means that 55% of the materials costs required to complete the units in the
department has already been incurred. Likewise, 30% of the conversion cost required to complete the units has
already been incurred.
Since Norton's work in process inventories are at different stages of completion in terms of amounts of materials cost
and conversion cost that have been added in the department, two equivalent unit figure must be completed.
The equivalent units computations are shown below.
Shaping and Milling Department Materials Conversion
Units transferred to the next department 4,800 4,800
Work in Process, May 31
400 units × 40% 160
400 units × 25% 100
-------- --------
Equivalent units of production 4,960 4,900
===== =====
Note from above computations that units in the beginning work in process inventory are ignored. The weighted
average method is concerned only with the fact that there are 4,900 equivalent units for conversion cost in ending
inventories and in units transferred to the next department―the method is not concerned with the additional fact that
some of this work was accomplished in the prior periods. This is a key point in the weighted average method that is
easy to overlook
2. Equivalent Units―First-in-First-Out (FIFO) Method:
The computation of equivalent units under FIFO method differs from weighted average method in two ways. First the
units transferred out figure is divided into two parts. One part consists of the units from beginning inventory that were
completed and transferred out, and the other part consists of the units that were both started and completed during
the current period. Second full consideration is given to the amount of work expended during the current period on
units in the beginning work in process inventory as well as units in the ending inventory. Thus, under the FIFO
method, it is necessary to convert both beginning and ending inventories to an equivalent unit basis. For the
beginning inventory, the equivalent units represent the work done to complete the units; for the ending inventory,
the equivalent units represent the work done to bring the units to a stage of partial completion at the end of the
period (the same as with the weighted average method). The formula for computing equivalent units of production is
more complex under FIFO method than under weighted average method.
Formula for Calculating Equivalent Units―FIFO method:
Equivalent Units of Production = Equivalent units to complete beginning inventory* + Units started and completed
during the period + Equivalent units in ending work in process inventory
*Equivalent units to complete beginning inventory = Units in beginning inventory × (100% − Percentage completion of beginning inventory)
Or, the equivalent units of production can also be determined as follows:
Equivalent Units of Production = Units transferred out + Equivalent units in ending work in process inventory
− Equivalent units in beginning inventory.
Example:
To illustrate the FIFO method, Refer again the data of shaping and milling department of Norton Company.
Shaping and Milling Department Materials Conversion
Work in Process May 1:
200 units × (100% − 55%)* 90
200 units × (100% − 30%)* 140
Units started and completed in May **4,600 **4,600
Work in process, May 31:
400 units × 40% 160
400 units × 25% 100
-------- --------
Equivalent Units of Production 4,850 4,840
===== =====
*This is the work needed to complete the units in the beginning inventory.
**(5,000 units started) − (400 units in the ending work in process) = 4,600 units started and completed. The FIFO
method assumes that the units in the beginning inventory are finished first.