Reference no: EM133049307
DQ 1. "Both a job costing system and a process costing system enable the calculation of the unit cost of a product. However, process costing provides a more accurate unit cost." Do you agree? Discuss.
DQ 2. "It is difficult to understand how costs can be assigned to equivalent units when such units do not really exist in a physical form." Discuss.
Exercises
1. Foamtastic Ltd is calculating equivalent units for conversion costs. Determine equivalent units using the weighted average method.
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Units completed during the month
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Ending work in process
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Weighted average equivalent units
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Units
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% complete
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1) 10 000
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0
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-
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a)
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2) 36 000
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6000
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50%
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b)
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3) 48 000
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4000
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30%
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c)
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4) 15 000
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5000
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20%
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d)
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Problems
1. Arona Co. produces a liquid cleaner for floors. At the beginning of March, 30,000 litres of liquid cleaner were in process. 100% complete as to raw material and 60% complete as to conversion costs. During the month, the company started 320,000 litres of liquid cleaner in production. At the end of the month, 40,000 litres of liquid cleaner were in work in process inventory, 100% completed as to raw materials and 40% completed in terms of conversion costs.
Assume that following costs were recorded by Arona Co. for the beginning work in process and the production performance for March:
Beginning inventory:
Raw materials costs $ 12,000
Conversion costs 15,800 March production costs:
Raw materials costs 163,000
Conversion costs 310,200
Required:
a) Prepare a schedule analysing the physical flow of units and calculating the equivalent units of both direct material and conversion for March. Use weighted average process costing.
b) Calculate the unit cost for each litre of liquid cleaner.
c) Determine the total costs of the litres of liquid cleaner finished during March. What is the balance of the ending work in process inventory?
2. MacCheese Ltd produces cheese topping for the fast pizza industry. At the beginning of October 50,000 kilograms of cheese topping was in process, 100% complete as to raw materials and 50% complete as to conversion costs. During the month, the company started 200,000 kilograms of cheese topping in production. At the end of the month, 30,000 kilograms of cheese topping was in work in process inventory, 100% completed as to raw materials and 40% completed in terms of conversion costs.
Assume that the following costs were recorded by MacCheese Ltd for the beginning work in process and the production performance for October:
Beginning inventory:
Raw materials costs $ 50,000
Conversion costs 18,000 October production costs:
Raw materials costs 200,000
Conversion costs 190,800
Required:
a) Prepare a schedule analysing the physical flow of units and calculating the equivalent units of both direct material and conversion for October. Use weighted average process costing.
b) Calculate the unit cost for each kilogram of cheese topping.
c) Determine the total costs of the kilogram of cheese topping finished during October. What is the balance of the ending work in process inventory?