Nakatihaya, Inc., manufactures beds that passes through two processes: Cutting and Assembly. All manufacturing costs are added uniformly in the Cutting Department. Information for the Cutting Department for December follows: Work in process, December 1: Units (50% Complete) 5,000 Units Direct materials P10,000 Direct labor P4,000 Overhead P1,000 During December, 55,000 units were started but only 50,000 units were completed and transferred to Assembly. The following costs were incurred by the Cutting Department during December: Direct materials P100,000 Direct labor 30,000 Overhead 20,000 There were 10,000 units remaining in the Cutting Department on December 30 that were 50 percent complete. On January 1, the Assembly Department had 5,000 WIP units in beginning inventory that were 30 percent complete. On January 31, 10,000 WIP units were in ending inventory, 50% complete. The costs associated with the 5,000 units in beginning inventory were as follows: Transferred in P70,000 Direct Materials P54,000 Direct labor P8,000 Overhead P4,000 During January, the Assembly Department received 50,000 units from the Cutting Department. 45,000 units were transferred to finished goods. Costs added by Assembly during January included Direct materials P96,000 Direct labor P40,000 Overhead P8,000 Prepare a cost of production report using the weighted average and FIFO methods for Cutting and Assembly.
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.
Nakatihaya, Inc., manufactures beds that passes through two processes: Cutting and Assembly. All
Work in process, December 1:
Units (50% Complete) 5,000
Units Direct materials P10,000
Direct labor P4,000
During December, 55,000 units were started but only 50,000 units were completed and transferred to Assembly. The following costs were incurred by the Cutting Department during December:
Direct materials P100,000
Direct labor 30,000
Overhead 20,000
There were 10,000 units remaining in the Cutting Department on December 30 that were 50 percent complete.
On January 1, the Assembly Department had 5,000 WIP units in beginning inventory that were 30 percent complete. On January 31, 10,000 WIP units were in ending inventory, 50% complete. The costs associated with the 5,000 units in beginning inventory were as follows:
Transferred in P70,000
Direct Materials P54,000
Direct labor P8,000
Overhead P4,000
During January, the Assembly Department received 50,000 units from the Cutting Department. 45,000 units were transferred to finished goods. Costs added by Assembly during January included
Direct materials P96,000
Direct labor P40,000
Overhead P8,000
Prepare a cost of production report using the weighted average and FIFO methods for Cutting and Assembly.
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