Lenlen Corporation produces a product through a continuous process in two departments. Materials in this department are added at the beginning of the process. The production and cost data were taken from Department B during September, 2022. Production data: Received from Department A Completed and transferred In process, end (50% complete) Lost Cost Data: Received from Department A Materials Labor Overhead 80,000 units 60,000 units 15,000 units 5,000 units P560,000 175,000 121,875 243,750
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.
Required: Prepare the cost of production report under the following assumptions:
1. Lost units classified as normal, discovered at the beginning of the process.
2. Lost units classified as normal, discovered during the process.
3. Lost units classified as normal, discovered at the end of the process.
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