Assume that 50,000 units are put into production for Job 101 and the total cost of production was P1,500,000. At the completion of production only 47,000 units were good. The remaining units were classified as spoiled and had a salvage value of P7,000. Management considers spoilage to be normal to the general production process and includes normal spoilage in the predetermined factory overhead application rate. When accounting for the spoilage of Job 101, what is the total amount of costs to be removed from work-in-process inventory?
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.
Assume that 50,000 units are put into production for Job 101 and the total cost of production was P1,500,000. At the completion of production only 47,000 units were good. The remaining units were classified as spoiled and had a salvage value of P7,000. Management considers spoilage to be normal to the general production process and includes normal spoilage in the predetermined factory
When accounting for the spoilage of Job 101, what is the total amount of costs to be removed from work-in-process inventory?
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