Question 1: The following is the condensed information from the records Dept. 2 of Shah Steel Mills, Karachi for the month of December 2020. 9,000 units received from Dept.1 with total cost of Rs.90, 000 Cost incurred in Dept. 2: Direct Material Labor Factory overhead applied (90% of Direct Labor) Company completed 6,000 units in December 2020 and transferred to the next department .Units in process at the end of the month are in the following stage of completion. Material 70% Conversion 30% 800, 000 m 500, 000 Required: Prepare cost of production report and give journal entries for Department 2.
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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