ABC LTD produces a single product which undergoes three processes. The following details relate to one period: Process I II III $ $ $ Raw Materials (60,000 units) 80,000 Materials Introduced 23,500 18,750 22,100 Direct Wages 15,600 12,000 13,400 Overheads allotted to Processes 3,800 4,600 3,200 Other overheads total $27,000 Units Units Units Output in units 55,200 53,800 49,600 A normal loss of 5% of the input to each process is anticipated. Units lost have the following scrap values: After process I Nil After process II $1
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.
ABC LTD produces a single product which undergoes three processes. The
following details relate to one period:
Process
I II III
$ $ $
Raw Materials (60,000 units) 80,000
Materials Introduced 23,500 18,750 22,100
Direct Wages 15,600 12,000 13,400
Other overheads total $27,000
Units Units Units
Output in units 55,200 53,800 49,600
A normal loss of 5% of the input to each process is anticipated.
Units lost have the following scrap values:
After process I Nil
After process II $1
After process III $1.80
There was no opening or closing WIP.
Prepare ledger accounts for the period.
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