A process costing system in your company. Direct material A is placed into production at the beginning of the process, while direct material B is placed into production at the end of the process. Inspection occurs at the end of the process, before the addition of direct material B. Normal spoilage is 5% of good units. For March the company had the following activities: Beginning work-in-process inventory 4,000 units, 30% complete Units placed in production 28,000 unit Good units completed 24,000 units Ending work-in-process inventory 6,000 units, 60% complete Cost of beginning work-in-process $10,000 ($5,500 direct material A, $4,500 conversion) Direct material A costs, current $38,000 Direct material B costs, current $26,400 Conversion costs, current $42,500 Required: Prepare a production cost worksheet assuming that spoilage is recognized and the weighted-average method is used.
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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