Jeddah Company produces a consumer item “ Mashroob” which passes through two departments. The company uses a process cost method. Cost data of the company for the month of September is as under: Depart. A Depart. B Material 70,000 50,000 Labour 35,000 25,000 Factory overhead 35,000 25,000 There was no beginning inventories. Units started in process 50,000. Units in process September 30: 20,000 – 25% complete in Department A 10,000 – 50 % complete in Department B Required: [ a) Equivalent Production Unit b) Unit Cost at Depart 2, c) Cost of Units transferred to Finished goods d) Cost of Work in Process at the end of June
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.
Jeddah Company produces a consumer item “ Mashroob” which passes through two departments. The company uses a
Depart. A Depart. B
Material 70,000 50,000
Labour 35,000 25,000
Factory
There was no beginning inventories. Units started in process 50,000. Units in process September 30:
20,000 – 25% complete in Department A
10,000 – 50 % complete in Department B
Required:
[ a) Equivalent Production Unit
b) Unit Cost at Depart 2,
c) Cost of Units transferred to Finished goods
d) Cost of Work in Process at the end of June
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