Problem 3: ABC Company manufactures a product in two departments: A and B. Owing to rigid quality of control measures, an avoidable unit loss occurs in Department B Production data for the month of May 2021 follows: 2/5 completed Units: In process, beginning Received from Dept. A Finished & transferred 20,000 30,000 5,000 10,000 2,000 Finished & on hand 1/4 completed In process, end. Lost units 60,000 105,000 Costs: In process, beginning Received from Dept. A Cost added: Materials Labor Overhead 3,875 26,960 17,290 Required: Prepare a cost of production report assuming lost units are discovered at the start of the process. Please use FIFO Method.
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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