a simple exampleofprocesscosting( no beg- n y u stern（一个简单exampleofprocesscosting(没有乞求u - n y船尾）（7页）.docVIP

A Simple Example of process costing: (No Beg. WIP and one production dept.) ACME Industries machines engine castings for an engine manufacturer. Thus only inputs direct labor and manufacturing overhead into production. (There is no direct material.) There is only one production department – the machining work center. It began business on 1/1/90 and uses actual absorption costing. The following information is available for January 1990. Units in beginning W-I-P Inv. 0 Units started into production 230 Units completed 180 ( Units in ending W-I-P Inv = (0 + 230 ( 180) = 50 Manufacturing costs for January: Direct labor $10,000 Manufacturing overhead $20,000 The 50 incomplete units were on average 40% complete as regards all conversion costs (( Direct Labor + Manufacturing Overhead) Note: In general the degree of completion can be different for each cost component. Required: Compute the following for January using actual absorption costing. a. Cost-of-Goods-Manufactured b. Ending balance of W-I-P inventory Solution: Consider the W-I-P Inventory account Work-In-Process Inventory Beg.Bal 0 units $0 180 units completed Started 230 units $ ? (COGM) Manf. costs for Jan. DL $10,000 MOH $20,000 End.Bal 50 units $ ? What is the accounting task at hand here? To allocate the dollars in the Beg. Bal. ($0 here) and the period’s manf. costs ($30,000 here) between two groups of units ( the 180 (complete units) finished in the period and the 50 incomplete units (only 40% finished) left on the factory floor at the end of the period. What seems a reasonable way to do this? If a completed unit is “charged” $Y, then a 40% complete unit should be charged $0.4(Y. ( 180 (Y + 50 ( 0.4 (Y = 30,000 ( (180 + 50 ( 0.4) (Y = 30,000 ( Y = 30,000 / (180 + 50(0.4) ( Y = $150 Completing the allocation tas