Happy Company produces a plastic toy in a two-stage manufacturing operation. The company uses a weighted average process costing system. During the month of May, the following data were recorded for the Finishing Department: Units of beginning inventory Percentage of beginning units completed Units started Units completed Units in ending inventory Percentage of ending units completed Spoiled units Costs added during current period Direct materials Direct labour Manufacturing overhead Work in process, beginning Direct materials Conversion costs Transferred-in costs Costs of unit transferred in during current period 10,000 units 25% 70,000 units Required Prepare the production report for the Finishing Department. 50,000 units 20,000 units 95% 10,000 RM655,200 RM635,600 RM616,000 RMO RM42,000 RM82,900 RM647,500 Conversion costs are incurred evenly throughout the process. Direct materials costs are added when production is 90% complete. Inspection occurs when production is 80% complete. Normal spoilage is 10% of all goods units that pass inspection. Spoiled units are disposed of at zero net disposal price.
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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