Question
In: Accounting
How is process costing for a single manufacturing department different from a manufacturing company with multiple...
How is process costing for a single manufacturing department different from a manufacturing company with multiple departments?
Solutions
Expert Solution
A single manufacturing department in process costing will have following cost incurred during production
· Direct material
· Direct labor
· Manufacturing overheads ( Direct labor and manufacturing overhead is referred as conversion cost)
In multiple department process costing subsequent departments will have transferred –in cost in addition to above cost. Direct material cost may not be there in subsequent department depending on item produced. In multiple department process costing the output of first department becomes the input for next department. Cost per equivalent unit is calculated for each component of cost separately depending on degree of completion. The transferred-in units from previous department are always 100% complete for Closing WIP since it is introduced in beginning of process. But in case of single manufacturing department Closing WIP percentage completion can vary depending when material is added in process.
ekkarill92 answered 2 years agoRelated Solutions
THE Company operates a single processing department and uses a FIFO process costing system. The equivalent...
THE Company operates a single processing department and
uses a FIFO process costing system. The equivalent units
for August were calculated as 88,620 for direct materials
and 73,910 for conversion. THE Company's work in process
at August 1 was:
% complete % complete
units DM conversion
work in process, Aug. 1 36,000 55% 26%
The cost of beginning work in process and the costs added
during August were as follows:
DM Conversion
work in process, Aug. 1 $ 44,310 $...
THE Company operates a single processing department and uses a FIFO process costing system. The equivalent...
THE Company operates a single processing department and
uses a FIFO process costing system. The equivalent units
for August were calculated as 88,620 for direct materials
and 73,910 for conversion. THE Company's work in process
at August 1 was:
% complete % complete
units DM conversion
work in process, Aug. 1 36,000 59% 25%
The cost of beginning work in process and the costs added
during August were as follows:
DM Conversion
work in process, Aug. 1 $ 44,310 $...
Process Costing Tempe Manufacturing Company makes a single product that is produced on a continuous basis...
Process Costing Tempe Manufacturing Company makes a single
product that is produced on a continuous basis in one department.
All materials are added at the beginning of production. The total
cost per equivalent unit in process in March 2009 was $4.60,
consisting of $3.00 for materials and $1.60 for conversion. During
the month, 8,700 units of product were transferred to finished
goods inventory; on March 31, 2,000 units were in process, 10
percent converted. The company uses weighted average costing....
Regal Polish manufactures a single product in one department and uses a process costing system. At...
Regal Polish manufactures a single product in one department and
uses a process costing system. At the start of May, there were
11,000 units in process that were 100 percent complete with respect
to direct material and 60 percent complete with respect to
conversion costs (labor and overhead). During the month, the
company began production of 105,000 units. Ending Work in Process
inventory consisted of 5,100 units that were 100 percent complete
with respect to material and 70 percent complete...
Companies can choose from different costing methods: process/product costing and activity-based costing. Think about a company...
Companies can choose from different costing methods:
process/product costing and activity-based costing. Think about a
company you know and answer the following:
What are the differences between the two costing
methods, and how do these apply to your company?
What are some ABC cost drivers the company might
use?
How could the costs differ if one method is chosen
over the other?
Which method would you recommend for your company, and
why?
Companies can choose from different costing methods: process/product costing and activity-based costing. Think about a company...
Companies can choose from different costing methods:
process/product costing and activity-based costing. Think about a
company you know and answer the following:
What are the differences between the two costing methods, and
how do these apply to your company?
What are some ABC cost drivers the company might use?
How could the costs differ if one method is chosen over the
other?
Which method would you recommend for your company, and
why?
Companies can choose from different costing methods: process/product costing and activity-based costing. The company I chose...
Companies can choose from different costing methods:
process/product costing and activity-based costing.
The company I chose is CVS. Using the CVS company answer the
following questions:
What are the differences between the two costing methods, and
how do these apply to your company?
What are some ABC cost drivers the company might use?
How could the costs differ if one method is chosen over the
other?
Which method would you recommend for your company, and
why?
Companies can choose from different costing methods: process/product costing and activity-based costing. Think about a company...
Companies can choose from different costing methods:
process/product costing and activity-based costing. Think about a
company you know and answer the following:
What are the differences between the two costing methods, and
how do these apply to your company?
What are some ABC cost drivers the company might use?
How could the costs differ if one method is chosen over the
other?
Which method would you recommend for your company, and
why?
Lumberjacks, Inc. makes wood frames. They have a single department and they use process costing (FIFO...
Lumberjacks,
Inc. makes wood frames. They have a single department and they use
process
costing (FIFO method).
On
January 31, they had the following costs in WIP:
Material
$ 45,860
Conversion
95,340
$ 141,200
There
were 3,000 frames on hand at 1/31. The frames were 80%
complete
wrt
Materials costs but only 20% complete wrt Conversion costs.
During
February, they started 18,450 frames into production. 2,200 frames
were not completed
in
February. The uncompleted units were 90% complete wrt...
The Company uses a single department production process. Materials are added at the start of the...
The Company uses a single department production process.
Materials are added at the start of the production process and
labor and overhead are added as indicated. For January 2018, the
Company records have the following information:
UNITS:
Beginning
WIP:
10,000 units
100% complete for materials, 50% complete for labor; 3% complete
for overhead
Units started in
process
50,000 units
Units
completed
49,000 units
Ending
WIP:
11,000 units
100% complete...
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