Pittsburgh Aluminum Company uses a process cost system to record the costs of manufacturing rolled aluminum, which consists of the smelting and rolling processes. Materials are entered from smelting at the beginning of the rolling process. The inventory of Work in Process-Rolling on September 1 and debits to the account during September were as follows: Bal., 1,200 units, 60% completed: Direct materials (1,200 x $3.6) $ 4,320 Conversion (1,200 x 60% x $1.5) 1,080 $ 5,400 From Smelting Department, 27,000 units $99,900 Direct labor 25,667 Factory overhead 13,821 During September, 1,200 units in process on September 1 were completed, and of the 27,000 units entering the department, all were completed except 3,500 units that were 20% completed. Charges to Work in Process-Rolling for October were as follows: From Smelting Department, 31,000 units $120,900 Direct labor 35,450 Factory overhead 19,086 During October, the units in process at the beginning of the month were completed, and of the 31,000 units entering the department, all were completed except 1,600 units that were 80% completed.
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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