One of Spa Magic's products is a whirlpool spa. Two processing departments are involved in the whirlpool spa's manufacture. The tub is assembled in one department, and a second department assembles and installs the motor. There was no beginning or ending work in process in either department on March 1. During March, the company incurred the following costs in the manufacture of 5,000 whirlpool spas. Direct materials Direct labor Manufacturing overhead Part I. Physical Flow Inputs: Beginning WIP . Started Whirlpool Spas to account for Outputs: • Units completed . • Ending WIP . Whirlpool spas accounted for Part II. Equivalent Units Based on monthly input: • Beginning WIP • Units started Equivalent units of input Based on monthly output: • Units completed . • Ending WIP Equivalent units of output Tub Department $1,250,000 100,000 600,000 Motor Department $750,000 60,000 30,000 Motor Department of Spa Magic Production Cost Report For the month of March Total Units Direct Materials Conversion
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.
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