ATOZ company's product is manufactured in two departments. Units are inspected at the end of the production process in the first department. Data related to the month of May are: WIP,beg (60% materials, 35% labor, and 25% FOH), 1,000 units; started in process this period, 9,000 units; WIP,end (100% materials, 75% labor and 50% FOH), 1,500 units. Cost data follows: WIP.beg P1,260 770 Cost this Month P36,240 Materials Labor 10,780 FOH 1,400 21,725
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.
1. Compute for the equivalent units of production using FIFO.
2. Compute for the cost per equivalent unit using average costing.
3. Compute for the total cost transferred to the next department using FIFO.
4. Compute for the cost of WIP, end using Average costing.
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