A manufacturing company uses process costing. The costs incurred in department during the month of July were: - Direct Material cost Rs.49,600 Direct Labor cost Rs.287,600 Factory overheads Rs.188,400 The quantity schedule shows that 50,000 units were received from department 1 at a unit cost of Rs.9. During the month, 30,000 units were completed and transferred out to next department. 5000 units were completed but in hand, 5000 units were lost during processing. The remaining units were in process at the end of the month. The degree of completion of the in-process units was as follows: - 50% of the units were 50% completed 20% of the units were 60% completed 10% of the units were 80% completed Remaining of the units were 40% completed Required: Prepare a cost of production report for the department 2 for the month of July 2021.
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 uses
Direct Material cost Rs.49,600
Direct Labor cost Rs.287,600
Factory
The quantity schedule shows that 50,000 units were received from department 1 at a unit cost of Rs.9. During the month, 30,000 units were completed and transferred out to next department. 5000 units were completed but in hand, 5000 units were lost during processing. The remaining units were in process at the end of the month. The degree of completion of the in-process units was as follows: -
50% of the units were 50% completed
20% of the units were 60% completed
10% of the units were 80% completed
Remaining of the units were 40% completed
Required: Prepare a cost of production report for the department 2 for the month of July 2021.
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