a. Hansen corporation manufacture a product which passes through two department the production and the cost of department 1 during June 20xx ae as follow. 52,700 units were started in process.48,000 units were completed and transferred to department number 2. Some 4000 units were in process at the end of month; these units were complete as to material but 70 percent converted. Remaining 700 units lost during processing. Costs incurred by the department were direct material 327,000 dollars, Direct Labor 72,000 dollars and FOH 51,000 dollars. You are required to make a cost of production report for the month of June 20xx.
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. Hansen corporation manufacture a product which passes through two department the production
and the cost of department 1 during June 20xx ae as follow. 52,700 units were started in
process.48,000 units were completed and transferred to department number 2. Some 4000 units
were in process at the end of month; these units were complete as to material but 70 percent
converted. Remaining 700 units lost during processing. Costs incurred by the department were
direct material 327,000 dollars, Direct Labor 72,000 dollars and FOH 51,000 dollars. You are required to make a cost of production report for the month of June 20xx.
b. In a factory differential Piece rate system is used. The differential applied as follow:
• 90 percent of standard piece rate for the output below standard
• 110 percent of standard piece rate for the output below standard
Standard output is 530 units per hour and standard wage rate is 950 dollars per hour. worker A
produced 520 Units, worker B produced 540 Units, and worker C produced 560 Unis.Calculate the earning of each worker under differential Rate system.
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