Prepare the necessary report together with a detailed schedule of ending work in process inventory; make journal entries to indicate the costs put to production and the departmental transfer. The Precision Products Company manufactures a single product being used for heavy industrial machineries. It operates on 3 shifts under 2 departments, Cutting Dept and Smoothing Dept. Materials are added to the product in each department; however, the number of units produced are not increased in the process. The following records for each department were obtained from the books of Precision Products Company for the month of January, 2019. Cutting Department Smoothing Department Work in process, January 1, 2019 Units transferred from preceding department 80,000 Units started in production 100,000 Units completed and transferred out 80,000 60,000 Units in process, January 31 20,000 18,000 Units spoiled in production 2,000 Spoiled units are 50% complete as to materials, labor, and overhead. Its cost is treated as a separate cost elements in the department where the spoilage occurs. Spoiled units have no recoverable value. Percentage of completion of units in process on January 31,2019 follows: Cutting Department Smoothing Department Materials 100% 100% Labor 60% 80% Overhead 20% 40% The following charges were indicated in the cost records for the month of January, 2019: Cutting Department Smoothing Department Materials 300,000 118,500 Labor 184,000 203,580 Overhead 100,800 75,020 Required: Cost of Production Report
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.
Prepare the necessary report together with a detailed schedule of ending work in process inventory; make
The Precision Products Company manufactures a single product being used for heavy industrial machineries. It operates on 3 shifts under 2 departments, Cutting Dept and Smoothing Dept. Materials are added to the product in each department; however, the number of units produced are not increased in the process.
The following records for each department were obtained from the books of Precision Products Company for the month of January, 2019.
Cutting Department
Smoothing Department
Work in process, January 1, 2019
Units transferred from preceding department
80,000
Units started in production
100,000
Units completed and transferred out
80,000
60,000
Units in process, January 31
20,000
18,000
Units spoiled in production
2,000
Spoiled units are 50% complete as to materials, labor, and
Percentage of completion of units in process on January 31,2019 follows:
Cutting Department
Smoothing Department
Materials
100%
100%
Labor
60%
80%
Overhead
20%
40%
The following charges were indicated in the cost records for the month of January, 2019:
Cutting Department
Smoothing Department
Materials
300,000
118,500
Labor
184,000
203,580
Overhead
100,800
75,020
Required: Cost of Production Report
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