Question

Search for How It’s Made

Your Topic: __________Legos_________________

Watch the video and answer the following questions:

https://www.youtube.com/watch?v=zrzKih5rqD0​

What is your product/service? Why is process costing appropriate for this setting?

Why does the company that makes the product/service need a cost system? Describe 2 decisions a manager might make based on cost information.

Describe the raw materials used in each process and name 2 costs that would be included in conversion cost for each process.

How would the company determine the cost of units in process at any given point in time? Why would managers need to know the cost of times in process?

Answer 1

What is your product/service? Why is process costing appropriate for this setting?

Product and services is making Legos, its a playing with plastic brics.Process costing is method of assigning costs to unit of production in companies producing large quantities of homogeneous products. Process costing is type of opearting costing which is used to ascertain the cost of product at each process or stage of manufactures.

The process costing is required within manufacture industry to determine the total production cost of unit of merchandise. It particular used in environment where production passes through multiple cost centre. Production within large corporation may require that move through more than one department, such as procuremnet, manufacturing, quality assurance and distribution.

Based on costing , whether to hire, make or buy that product, accept or reject order at special price.

Describe the raw materials used in each process and name 2 costs that would be included in conversion cost for each process.

The raw materials are plastic pipes and plastic granuals. The standard costing and First In first out costing would be included in conversion cost for each process.

How would the company determine the cost of units in process at any given point in time? Why would managers need to know the cost of times in process?

Process costing is the only reasonable approach to determining product costs in many industries.   It uses most of the same journal entries found in a job costing environment, so there is no need to restructure the chart of accounts to any significant degree. This makes it easy to switch over to a job costing system from a process costing one if the need arises, or to adopt a hybrid approach that uses portions of both systems.

The cost of time in process, to determine variable cost, the cost associates with labor. so it is required to managers to know the cost.