Question 02: CPR with loss: Akroain corporation manufacture a product which passes through two department the production and the cost of department 1 during may 20xx ae as follow. 42,500 units were started in process.38000 units were completed and transferred to department number 2. Some 4000 units were in process at the end of month; these units were complete as to material but ½ converted. Remaining 500 units lost during processing. Costs incurred by the department were direct material 126,000 dollars, Direct Labor 80,000 dollars and FOH 40,000 dollars. You ae required to make a cost of production report for the month of may 20xx.
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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