Jim Davis Company processes hogs into three products, chops, bacon and sausage. Production and selling price data follow: Chops 100,000 lbs. $5.00/ lb. Bacon 210,000 lbs. $4.00/ lb. Sausage 410,000 lbs. $2.00/ lb. Hogs are processed in the Processing Department. From the split-off point, bacon is smoked, sliced and packaged in the Bacon Department. The cost incurred for these processes was $100,000. In addition, sausage was ground and formed into patties in the Sausage Department after the split-off. This process cost $60,000. Question Using the information above, if joint processing costs were $1,500,000, calculate the total cost of each product using the adjusted sales value method.
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.
Jim Davis Company processes hogs into three products, chops, bacon and sausage. Production and selling price data follow:
|
Chops |
100,000 lbs. |
$5.00/ lb. |
|
Bacon |
210,000 lbs. |
$4.00/ lb. |
|
Sausage |
410,000 lbs. |
$2.00/ lb. |
Hogs are processed in the Processing Department. From the split-off point, bacon is smoked, sliced and packaged in the Bacon Department. The cost incurred for these processes was $100,000. In addition, sausage was ground and formed into patties in the Sausage Department after the split-off. This
Question
Using the information above, if joint processing costs were $1,500,000, calculate the total cost of each product using the adjusted sales value method.
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