Eco−Eliminator Manufacturing produces a chemical pesticide and uses process costing. There are three processing departments—Mixing, Refining, and Packaging. On January 1, the first department—Mixing—had no beginning inventory. During January, 50,000 fl. oz. of chemicals were started in production. Of these, 42,000 fl. oz. were completed, and 8,000 fl. oz. remained in process. In the Mixing Department, all direct materials are added at the beginning of the production process, and conversion costs are applied evenly throughout the process. The weighted−average method is used. At the end of January, the equivalent unit data for the Mixing Department were as follows: UNITS Equivalent Units Equivalent Units Units to be accounted for Direct Materials Costs Conversion Costs Completed and transferred out 42,000 42,000 42,000 Ending work−in−process* 8,000 8,000 3,200 50,000 50,000 45,200 * Percent complete for conversion costs: 40%
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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UNITS
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Equivalent Units
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Equivalent Units
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Units to be accounted for
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Direct Materials Costs
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Conversion Costs
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Completed and transferred out
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42,000
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42,000
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42,000
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Ending
work−in−process*
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8,000
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8,000
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3,200
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50,000
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50,000
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45,200
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