Problem 2. Starlight Manufacturing Company uses two types of materials in its processing operation and adds these materials as follows: 4 pounds of Material X at the start of the process and two pounds of Material Y when the process is 50% complete. Conversion costs are incurred uniformly throughout the process. At 50% stage of completion, inspection occurs and any spoiled units are scrapped. The following data pertains to August operation of Starlight Company. In process, Aug 1 process, Aug 31 Units completed & transferred Unit costs: Material X Material Y Conversion costs per EUP 18,000 units, 75% complete 6,000 units, 25% complete 73,800 units P6.00 per pound P4.00 per pound P8.00 REQUIRED: Prepare a 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.
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