Mental Health Corporation has manufactured 100,000 units of compound X in 2021 at the following costs. Labor of P242,500 of which 93% represents direct labor. Materials of P182,500 of which 90% represents direct materials. Opening work in process is P88,125. Closing work in process inventory is P67,500. Overhead is applied at 125% of direct labor cost. The cost of goods manufactured is * a. P 671,150 b. P 692,306 c. P 651,036 d. P 727,531
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.
Mental Health Corporation has manufactured 100,000 units of compound X in 2021 at the following costs. Labor of P242,500 of which 93% represents direct labor. Materials of P182,500 of which 90% represents direct materials. Opening work in process is P88,125. Closing work in process inventory is P67,500.
a. P 671,150
b. P 692,306
c. P 651,036
d. P 727,531
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