A manufacturing company produces a product that requires two types of materials: material A and material B. The company uses the weighted-average method to calculate material costs. The following information is available for the month of February: Beginning inventory: • Material A: 200 units at Shs.5 per unit • Material B: 300 units at Shs.8 per unit Purchases during the month: • Material A: 1,000 units at Shs.6 per unit • Material B: 800 units at Shs.10 per unit Ending inventory: • Material A: 400 units • Material B: 500 units During the month, 1,200 units of the product were produced, and the total material cost was Shs.17,760. Required: What is the cost per unit for material A and material B? Show all workings.
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 manufacturing company produces a product that requires two types of materials: material A and material B. The company uses the weighted-average method to calculate material costs. The following information is available for the month of February: Beginning inventory:
• Material A: 200 units at Shs.5 per unit
• Material B: 300 units at Shs.8 per unit Purchases during the month:
• Material A: 1,000 units at Shs.6 per unit
• Material B: 800 units at Shs.10 per unit Ending inventory:
• Material A: 400 units
• Material B: 500 units During the month, 1,200 units of the product were produced, and the total material cost was Shs.17,760.
Required: What is the cost per unit for material A and material B? Show all workings.
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