Hawk company employs Weighted Average process costing system in the assembly department and FIFO process costing system in the finishing department concerning its only product which undergoes production in assembly department and finishing department. The following data for the year ended December 31, 2021 are provided: ASSEMBLY DEPARTMENT Units Cost January 01, 2021 100,000 units – 40% completed as to conversion cost Cost of Direct Material – P3M Cost of Direct Labor – P5M Cost of Factory Overhead – P2M December 31, 2021 150,000 units – 80% completed as to conversion cost ? Units started during the year 400,000 units DM cost added during 2021 – P12M DL cost added during 2021 – P15M FOH cost added during 2021 – P13M FINISHING DEPARTMENT Units Cost January 01, 2021 50,000 units – 70% incomplete conversion cost Cost of Transferred in – P10M Cost of Direct material - P6M Cost of Direct labor – P1M Cost of Factory Overhead – 3M December 31, 2021 30,000 units – 10% incomplete as to conversion cost ? Units started during the year DM cost added during 2021 – P30M DL Cost added during 2021 – P40M FOH cost added during 2021 – P10M Additional information for the year: It is the company’s policy to add conversion cost evenly throughout the period in the two departments. It is the company’s policy to add all direct materials in the assembly department at the start of the process while all direct materials in the finishing department are added at the end of the process. There is no spoilage in both departments. In the finishing department, what is the cost assigned to December 31, 2021 work-in-process inventory?
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Hawk company employs Weighted Average
|
ASSEMBLY DEPARTMENT |
||
|
|
Units |
Cost |
|
January 01, 2021 |
100,000 units – 40% completed as to conversion cost |
Cost of Direct Material – P3M Cost of Direct Labor – P5M Cost of Factory Overhead – P2M |
|
December 31, 2021 |
150,000 units – 80% completed as to conversion cost |
? |
|
Units started during the year |
400,000 units |
DM cost added during 2021 – P12M DL cost added during 2021 – P15M FOH cost added during 2021 – P13M |
|
FINISHING DEPARTMENT |
||
|
|
Units |
Cost |
|
January 01, 2021 |
50,000 units – 70% incomplete conversion cost |
Cost of Transferred in – P10M Cost of Direct material - P6M Cost of Direct labor – P1M Cost of Factory Overhead – 3M |
|
December 31, 2021 |
30,000 units – 10% incomplete as to conversion cost |
? |
|
Units started during the year |
|
DM cost added during 2021 – P30M DL Cost added during 2021 – P40M FOH cost added during 2021 – P10M |
Additional information for the year:
- It is the company’s policy to add conversion cost evenly throughout the period in the two departments.
- It is the company’s policy to add all direct materials in the assembly department at the start of the process while all direct materials in the finishing department are added at the end of the process.
- There is no spoilage in both departments.
In the finishing department, what is the cost assigned to December 31, 2021 work-in-process inventory?
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