American Sugar Refinery uses process costing. The quantity schedule of Blending Department for May 2021 shows 40,000 units were started for production during the month of May; 30,000 units were transferred to the next department, and 10,000 units were still in process at the end of May which were 60% complete as to materials cost and 30% complete as to conversion cost. Following Costs is added by the Blending department during the month of May: Materials $432,000 Labor 165,000 Manufacturing overheads (MOH) 132,000 Requirement: Prepare the cost of production report for the month of May 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.
American Sugar Refinery uses
for May 2021 shows 40,000 units were started for production during the month of May; 30,000 units were
transferred to the next department, and 10,000 units were still in process at the end of May which were 60%
complete as to materials cost and 30% complete as to conversion cost. Following Costs is added by the
Blending department during the month of May:
Materials $432,000
Labor 165,000
Manufacturing
Requirement:
Prepare the cost of production report for the month of May 2021.
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