Container Shipping, Inc. is contemplating the use of process costing to track the cost of its operations. The operation consists of three segments (departments): receiving, shipping, and delivery. Containers are received at Container's docks and sorted according to the ship they will be carried on. The containers are then loaded onto a ship, which carries them to the appropriate port of destination. The containers are then off-loaded and delivered to the receiving company.
Container shipping wants to begin to use process costing in the shipping department. Direct materials represent the fuel costs to run the ship, and "Containers in transit" represents work in process. Listed below is information about the shipping department's first month's activity.
- Containers in Transit April 1 0
- Containers loaded 800
- Containers in Transit April 30 350 40% of direct materials and
- 30% of conversion costs
Determine the physical flow of containers for the month.
Total containers =
Compute the equivalent units for direct materials and conversion costs: (Round answers to 0 decimal places, e.g. 125.)
Direct Materials
Conversion Costs