Joint Cost Allocation—Weighted Average Method Custom Carvings Company jointly produces wood chips and sawdust used in agriculture. The wood chips and sawdust are actually by-products of the company’s core operations, but Custom Carvings accounts for them just like normally produced goods because of their large volumes. One jointly produced batch yields 2,000 cubic yards of wood chips and 6,000 cubic yards of sawdust, and the estimated cost per batch is $27,300. However, the joint production of each good is not equally weighted. Given management estimates for how long it takes to make sawdust vs. wood chips, a weight factor of 14 is used for wood chips in the joint production process, and a weight factor of 2 is used for sawdust. Given this information, allocate the joint costs of production to each product using the weighted average method. Joint Product Allocation Sawdust $fill in the blank 1 Wood chips fill in the blank 2 Totals $fill in the blank 3
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.
Joint Cost Allocation—Weighted Average Method
Custom Carvings Company jointly produces wood chips and sawdust used in agriculture. The wood chips and sawdust are actually by-products of the company’s core operations, but Custom Carvings accounts for them just like normally produced goods because of their large volumes. One jointly produced batch yields 2,000 cubic yards of wood chips and 6,000 cubic yards of sawdust, and the estimated cost per batch is $27,300. However, the joint production of each good is not equally weighted. Given management estimates for how long it takes to make sawdust vs. wood chips, a weight factor of 14 is used for wood chips in the joint production process, and a weight factor of 2 is used for sawdust.
Given this information, allocate the joint costs of production to each product using the weighted average method.
| Joint Product | Allocation |
|---|---|
| Sawdust | $fill in the blank 1 |
| Wood chips | fill in the blank 2 |
| Totals | $fill in the blank 3 |
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