Crane Instrument Company uses a process costing system. A unit of product passes through three departments-moulding, assembly, and finishing-before it is completed. The following activity took place in the finishing department during May: Units Work in process inventory, May 1 2,100 Transferred in from the assembly department 14,200 Completed and transferred out to finished goods inventory 12,000 Raw material is added at the beginning of processing in the finishing department. The work in process inventory was 70% complete in terms of conversion costs on May 1 and 40% complete in terms of conversion costs on May 31. Crane Instrument Company uses the weighted-average method. The equivalent units and current period costs per equivalent unit of production for each cost factor are as follows for the finishing department: Current Period Costs Equivalent per Units Equivalent Unit Transferred-in costs 15,100 $6.30 Raw materials 15,100 2.30 Conversion costs 13,350 4.10 Total $12.70
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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