A product passes through three processes-P, Q and R. The details of expenses incurred on the three processes during the year 2019 were as under : P R Units Issued 10,000 $ 100 Cost per Unit Sundry Materials Labour Sale Price of Output (per unit) Management expenses during the year were $ 80,000 and selling expenses were $ 50,000. These are not allocable to the processes. Actual output of the three processes was : Process P-9,300 units ; Process Q-5,400 units; Process R-2,100 units. Two-thirds of the output of Process P and one-half of the output of Process Q was passed on to the next process and the balance was sold. The entire output of Process R was sold. The normal loss of the three processes, calculated on the input of every process, was: Process P-5%; Process Q-15% ; and Process R–20%. The loss of Process P was sold at $ 2 per unit, that of Process Q at $ 5 per unit and that of Process R at $ 10 per unit. Prepare the three Process Accounts and the Profit & Loss A/c 16,000 30,000 120 33,150 80,000 165 32,200 65,000 250
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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