SAKA ACCOUNTING PRACTICE: Process Costing Part4

Wednesday, April 2, 2014

WACC

Opening WIP (For 5kg of Material = $10, =100% complete, Labor and overhead = 60% complete =$15

	Material Unit	Material Cost	Processing Unit	Processing Cost
Opening WIP to complete in the period	5Kg	$10	5Kg	$15 (incurred in earlier period)
Started and completed in the period	50Kg	$100	50Kg	$312
Started and not completed WIP	10Kg	$30	2.5Kg	$15
Equivalent	65Kg	$140	57.5Kg	$342
Cost per equivalent unit	=140/65 =$2.1538		=342/57.5 =5.9478
Total Cost per Kg = 2.1538+5.9478 = 8.1016 ****

Started and completed in period (50kg Material = $100, Labor and overhead = (6*50)+(6*0.4*5) =$312

Cost incurred for the period in closing WIP are $20 for material and $15 for labor

Note=(6*0.4*5) or $12 not included in opening cost for 40% incomplete process is accounted here

Closing WIP (For 10kg of Material = $30, =100% complete, Labor and overhead = 25% complete =$15

	Process 1 account
Increase Debit	kg	$	Total	Decrease Credit	kg	$	Total
Opening Material Conversion	5 3	2 5	10 15	Finished & Transferred	55	8.1016	445.6
Input for the period Material Conversion	60 54.5	6	130 327	Closing Material Conversion	10 2.5	2.1538 5.9478	21.5 14.9
			482				482

Cost per equivalent unit = 2.1538+5.9478 = 8.1016 ****

Expanding Production Situation:

Process 2 (Assume that the finished product form process 1 are transferred to this process

Material Y - 2kg @ $20/kg

Conversion charge -$12 per kg of material Y

Average cost per unit = 509.6/57 = 8.94

SAKA ACCOUNTING PRACTICE