Question

A) Which of the following industries would typically use job order costing, and which would typically use process costing?

Clothing factories

Accounting consulting firms

Food companies

Shampoo manufacturer

Aircraft manufacturing company

Sports drink manufacturer

B) Fortress Steel Company has two departments, Casting and Rolling. In the Rolling Department, ingots from the Casting Department are rolled into steel sheet. The Rolling Department received 1,200 tons from the Casting Department. During July, the Rolling Department completed 1,100 tons, including 150 tons of work in process on July 1.The ending work in process inventory on July 31 was 250 tons. How many tons were started and completed during July?

C) The Rolling Department of Fortress Steel Company had 150 tons in beginning work in process inventory (25% complete) on July 1. During July, 550 tons were completed. The ending work in process inventory on July 31 was 250 tons (40% complete). What are the total equivalent units for direct materials for July if materials are added at the beginning of the process?

D) The Rolling Department of Fortress Ridge Steel Company had 150 tons in beginning work in process inventory (25% complete) on July 1. During July, 1,100 tons were completed. The ending work in process inventory on July 31 was 250 tons (40% complete). What are the total equivalent units for conversion costs?

E) The cost of direct materials transferred into the Rolling Department of Oak Ridge Steel Company is $510,250. The conversion cost for the period in the Rolling Department is $143,325. The total equivalent units for direct materials and conversion are 650 tons and 612.50 tons, respectively. Determine the direct materials and conversion costs per equivalent unit.

Answer 1

A

Food companies would typically use job order costing as

Job order costing system is. Used when the different items produced are sufficiently different from each other and has different significant cost.

Clothing factories would use process costing

As process costing will help the factories to analyze the raw material cost together with garment processing cost and all other cost associated with it.

B.

	no.of tons started & completed
	particulars	tons
	received	1200
add	opening WIP	150
	total	1350
less	closing WIP	250
	balance	1100
therefore no. of tons completed in july is 1100 tons
and freshly started is 950 tons (1100-150)

C.

particulars	tons	remarks
opening WIP	112.5	(150*75%)
completed	550
closing WIP	100	(250*40%)
equivalents units	650	(550+100)

           

D

	calculation of units for conversion cost
	particulars	tons	remarks
Jul-01	opening WIP	150	(150*75%)
july	completed	1100
	closing WIP	100	(250*40%)
	equivalents units	1350

E.

particulars	total cost	units	cost per equivalent unit	remarks
cost for Dm Transferred	510250	650	785	(cost/no.of unit)
conversion cost	143325	612.5	234	(cost/no.of unit)