Manufacturing cost 23,000 2,200 1,800 after separation Selling and general 12,000 1,500 1,100 expenses
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.
Exercise 8-7. REVERSAL COST METHOD FOR BY-PRODUCTS
RC Inc. manufactures one main product and two by-products. Data for July of the current year follow:
Main By product Byproduct
Product A B
Sales P150,000 P 12,000 P 7,000
before separation
Manufacturing cost 23,000 2,200 1,800
after separation
Selling and general 12,000 1,500 1,100
expenses
REQUIRED: An income statement, assuming no beginning or ending inventories and using the reversal cost method for the by-products, allowing a 15% operating profit for Byproduct A and 12% operating profit for Byproduct B.
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