week 2 SUFE Process Costing week 2 Feb 2012

Transferred materials in from added process 1

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Unformatted text preview: 0%) Opening WIP 1600 640 (40%) 480 (30%) Inputs in the month of January 6160 5920 6000 Costs incurred MA Ltd. Transferred in Materials Conversion Total Brought forward - - - $12,600 Current period $ 36,200 $ 19,000 $ 24,000 $79,200 Total $ 36,200 $ 19,000 $ 24,000 $91,800 Costs per unit (book) MA Ltd. Transferred in Cost/book $ 3.0844 Materials Conversion Total $ 4.0541 $ 4.0541 $ 13.1718 Cost of production report • • Finished Goods: Consisting of: $ 72,789 • • • • • Brought forward: $ 12,600 Products to be completed : 960 materials and 1120 conversion 960 units * $ 3.0844 (Material)= $ 2,961 1120 units * $ 4.0541= $ 4,541 Products started and completed in February: (Inputs-WIP at end= 6000-2000 units) • 4000 units * $ 13.1718 (total cost/unit)=$ 52,687 • • • • • Closing WIP: Transferred in from process 1: 2000 units * $ 6.0333=$ 12,067 Materials 1200 units * $ 3.0844= $ 3701 Conversion costs 800 units * $ 4.0541= $ 3,243 Total Closing WIP $ 19,011 • Total Costs Accounted for: $ 91,800 Assignment Process Costing • • • Chanel produces perfume and uses two fragrances F1 and F2 for its brand CHANCE: F1 is used from the beginning of the production F2 is added when F1 is 85% completed In March 2005: – WIP 1st of the month: 3 M units 50% completed – – – • Material costs $ 2 M Conversion costs $ 0.3 M WIP 31st of the month: 5 M units 90% completed Costs incurred in March: – – – Fragrance 1: $ 80 M Fragrance 2: $ 10.25 M Conversion costs: $ 40.6 M • During March 2005 202 M units were started and Chanel uses Weighted Average costs to value inventories since F1 and F2 fluctuate highly in price and Chanel wants to mitigate the effect of these volatile prices on its profits. • 1) Calculate: The equivalent units for F1 and F2 and the Conversion costs for March 2005 for this perfume of Chanel 2) Calculate the costs per unit for F1 , F2 and Conversion costs 3) Calculate the total costs for units transferred to the Finished Goods Warehouse of Chanel 4) Calculate the total value of the WIP per the end of March 2005 • • • Job costing versus Process costing Job • Job costing: costs of material, Job labor and factory overheads are allocated to unique job or customer order customer • Process costing: costs of Process material, labor and overheads are allocated to a process (cost centre or department) which outputs a large number of product units product Examples of jobs (unique products for a specific customer) for • External Accountant’s External work work • Lawyer’s work • Architectures’ work • Ship building • Plane building • Printing Job Cost control card Job ! E L P M A S Inputs to Outputs flow Inputs • Direct Material + Lab...
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