Problem 2. Average Costing Ka Louie Company manufacturing virgin coconut oil that goes through two processing departments. Data for May 2014 are as follows: Bottling Department Mixing Department Liters transferred to Bottling Department Liters transferred to Finished goods Liters on hand at end of month 75,000 68,000 15,000 9,000 Stage of Completion: Prior department costs Direct Materials 100% 100% 60% Conversion costs 100% Costs incurred during May: Direct Materials P18,480 Conversion Costs P32,160 P25,900 Beginning work-in-process inventory Liters 8,000 8,000 Costs: P6,350 Prior department's costs Direct Materials P1,680 P4,020 Conversion Costs P2.220 All materials are added at the start of the process in the Mixing Department. 1.Compute equivalent unit of production. a. Mixing Department b. Bottling Department 2. Prepare a separate cost of production report. a. Mixing Department b. Bottling Department
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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