A Chemical Company manufactures joint products Pep and Vim, and a by-product Zest. Costs are assigned to the joint products by the market value method, which considers further processing costs in subsequent operations. For allocating cost to the by-product, the market value or reversal cost method is used. Total manufacturing costs for 10,000 units were P172,000 during the quarter. Production and cost data follow: Pep Vim Zest Units Produced 5,000 4,000 1,000 Sales price per unit 50.00 40.00 5.00 Further processing cost per unit 10.00 5.00 0.00 Selling & Adm. Expense per unit 0.00 0.00 2.00 Operating Profit per unit 0.00 0.00 1.00
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
A Chemical Company manufactures joint products Pep and Vim, and a by-product Zest. Costs are assigned to the joint products by the market value method, which considers further processing costs in subsequent operations. For allocating cost to the by-product, the market value or reversal cost method is used. Total
|
|
Pep |
Vim |
Zest |
|
Units Produced |
5,000 |
4,000 |
1,000 |
|
Sales price per unit |
50.00 |
40.00 |
5.00 |
|
Further |
10.00 |
5.00 |
0.00 |
|
Selling & Adm. Expense per unit |
0.00 |
0.00 |
2.00 |
|
Operating Profit per unit |
0.00 |
0.00 |
1.00 |
The gross profit for Pep is
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