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# Process and Job Costing

Process costs

Pitt Chemical Co. manufactures & sells Goody, a product that sells for \$10 per pound. The mfg process also yields 1 pound of a waste product, called Baddy, in the production of every 10 pounds of Goody. Disposal of the waste product costs \$1 per pound. During March, the company manufactured 200,000 pounds of Goody. Total manufacturing costs were as follows:

Direct materials \$232,000
Direct Labor 120,000
Mfg Support Costs 60,000
Total Costs \$412,000

Determine the cost per pound of Goody.

Process costing equivalent units

The information below pertains to July production at Port Company's paint factory, which paints for household interiors:

Work in process, July 1 - Gallons 3000
Materials 30% complete
Conversion 20% complete

Started in July - Gallons 7000
To Account for - Gallons 10,000

Completed & transferred out - Gallons 6000
Materials 100% complete
Conversion 100% complete

Work in process, July 31 - Gallons 4000
Materials 25% complete
Conversion 10% complete
Accounted for - Gallons 10,000

Using the weighted-average method, determine the number of equivalent units of production for materials & conversion during July.

Job costing for services

The Hill Co. sells & services lawn mowers, snow blowers & other equipment. The service dept uses a job order cost system to determine costs of each job, such as oil changes, tune-ups & repairs. The dept assigns conversion costs through a cost driver rate on the basis of direct labor hours. The cost driver rate additionally includes a markup of 25% on the job's conversion costs in order to provide a reasonable profit for Hill. The customer's invoice itemizes prices for parts & labor, where the stated labor rate is the dept's cost driver rate that includes direct labor costs, assigned overhead costs & the 25% markup on conversion costs. Hill Co.'s service dept estimated the following information for 2006.

Salaries of Mechanics \$120,000
Fringe Benefits \$54,000
Depreciation \$42,000
Billable Direct Labor Hours \$4500

A. Determine Hill Co's service dept's cost driver rate to be used to assign conversion costs on the basis of billable direct labor hours.
B. Job 254 required \$47.40 of materials and 0.7 direct labor hours. Determine the price charged for job 254.

#### Solution Summary

The solution explains calculations relating to process costing and job order costing

\$2.19