A company manufactures a chemical product by a series of operations in three processes. Raw material is fed into Process I and the finished chemical that comes out of Process III is transferred to finished goods store. The following particulars relating to operations for April 2019 are given below : Process I Process II Process III $9,60,000 $1,25,600 $1,68,000 3% Raw materials issued 80,000 kgs. Direct wages Overhead costs Normal processing loss (% of input) Output transferred to next process Work-in-process (cb) (Processed material awaiting transfer to next process) Prepare the accounts of Processes I, II, and III and also abnormal loss and abnormal gain accounts, if any. $1,72,000 $1,77,280 $1,42,500 $1,24,690 2% 1% 69,000 kgs. 74,000 kgs. 3,000 69,400 kgs. 2,400
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.
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