Question

Chapter five assignment 1. what is the primary purpose of process costing? is to determine the cost of production for companies that mass produce very similar or identical products or units of output 2. there were 1,700 units in beginning inventory that were 40% complete with regard to conversion. during the month, 8,550 units were started and 9,000 were transferred to finished goods. the ending work in process was 60% complete with regard to conversion costs, and materials are added at the beginning of the process. what is the total amount of equivalent units for materials and conversion at the end of the month using the weighted-average method? beginning inventory 1,700 started in production 8,550 total units to account for 10,250 equivalent units total units material units conversion units transferred out 9,000 9,000 9,000 ending inventory 1,250 1,250 750 total units accounted 10,250 10,250 9,750 for 10,250 – 9,000 = 1,250 1,250 x .60 = 750 3. how many units must have been completed and transferred if beginning inventory was 75,000 units, ending inventory was 72,000 units, and 290,000 units were started? 293,000 units 4. a company started the month with 8,329 units in work in process inventory. it started 23,142 units and had an ending inventory of 9,321. the units were 100% complete to materials and 67% complete with conversion. how many units were transferred out during the period? material units conversion units beginning work in process 8,329 5,580 units started during period 23,142 15,505 ending work in process 9,321 6,245 units transferred out

Answer 1

The primary purpose of process costing is to calculate the cost of production for companies that mass-produce similar items. Equivalent units are calculated considering the stages of completion and materials added. Average and marginal cost measurements provide insights into the cost per unit of production.

Step-by-step explanation:

The primary purpose of process costing is to ascertain the cost of production for companies that produce very similar or identical items in mass quantities. This method provides insights into cost origins related to production, enabling firms to manage and control costs effectively. Specifically, process costing helps in calculating the costs associated with each stage of production.

To determine the equivalent units using the weighted-average method, we consider the units transferred to finished goods and the completion percentage of the ending inventory. For materials, since they are added at the beginning of the process, the equivalent units would be the same as the transferred-out units. However, for conversion, we must account for the percentage completion of beginning inventory and ending inventory. Based on the figures provided, the equivalent units of materials are 10,250, and for conversion costs, 9,750.

Moreover, when discussing cost measurement, average cost, and marginal cost are essential concepts. Average cost refers to the total cost divided by the output quantity, whereas marginal cost is the incremental cost of producing an additional unit. These measures help in assessing the cost efficiency and decision-making associated with production.