$ 22,960* Work in process, January 1, 1,400 units, 75% completed *Direct materials (1,400 x $12.65) $17,710 Conversion (1,400 × 75% × $5.00) 5,250 $22,960 Materials added during January from Weaving Department, 58,000 units Direct labor for January $742,400 134,550 Factory overhead for January 151,611 Goods finished during January (includes goods in process, January 1), 56,200 units Work in process, January 31, 3,200 units, 30% completed
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.
The Cutting Department of Karachi Carpet Company provides the following data for January. Assume that all materials are added at the beginning of the process.
Attachment
a. Prepare a cost of production report for the Cutting Department.
b. Compute and evaluate the change in the costs per equivalent unit for direct materials and conversion from the previous month (December).
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