Irfan Inc, instituted a new process in October, during which it started 10,000 units in Department H. Out of 10,000 units, 1,000 units, a normal number, were lost during the process: 7,000 were transferred to Department B: and 2,000 remained in work in process inventory at the end of the month, 100% complete as to materials and 50% complete as to conversion cost. Materials and conversion cost of Rs. 27,000 and Rs. 40,000, respectively, were charged to the department in October. The cost of work in process inventory at the end of month:
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.
Irfan Inc, instituted a new process in October, during which it started 10,000 units in Department H. Out of 10,000 units, 1,000 units, a normal number, were lost during the process: 7,000 were transferred to Department B: and 2,000 remained in work in process inventory at the end of the month, 100% complete as to materials and 50% complete as to conversion cost. Materials and conversion cost of Rs. 27,000 and Rs. 40,000, respectively, were charged to the department in October.
The cost of work in process inventory at the end of month:
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