Coastal Brewers manufactures fruit infused beers for local as well as international consumption. The Beer is prepared through two processes. Process I involves Blending and Fermentation and Process 2 involves Canning and Labeling for market. The packing of finish product cost is minimal in relation to the other processes and is not treated as a separate process. All beer related direct materials are added at the beginning of process 1. The information presented below is for process 1. The organization uses the FIFO method for inventory valuation. Physical units (liters) Direct Materials Conversion Cost Work in process July 01. Degree of completion materials 100%, conversion 50% 500,000 $100,000 $160,000 Started in July 4,500,000 Normal spoilage 3% of inputs Good units completed and transferred out in July ? Work in process July 31. Degree of completion, 100,% conversion 60% 400,000 Cost added during July $1,350,000 $1,820,000 All spoiled units are 40% complete as to conversion. 200,000 (liters) The spoiled units result from temperature fluctuations during the fermentation process. Required Prepare a process costing work sheeting using the fifo method
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.
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