Producers Inc. purchases its major raw materials from Consolidators Co. and processes them up to split-off point, where two products (AA and CC) are obtained. The products are then sold to an independent company that markets and distributes them to retail outlets. For the month just ended the data on the next page were made available: Raw materials purchased Production 25,000 units AA 15,000 units 15,000 units CC Sales AA 14,500 units @ P2 15,000 units @ P5 СС The cost of purchasing 25,000 units of raw materials and processing them up to the split-off point to yield equal number of production of AA and CC of 15,000 units each amounted to P37,500. There were no beginnirig inventories but there were 500 units of AA at the end of the month. 20. Using the sales value at split-off method, the approximate weighted cost proportions (may be rounded) of AA and CC were a. AA, 29% and CC, 71% - b. AA, 33% and CC, 67% c. AA, 49% and CC, 51% d. AA, 50% and CC, 50%
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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