QUESTION 15 The following data relate to Process 2 of Danvee Ltd, a camera film manufacturer, for the financial year ended 31 December 2020. At the beginning of the year, there were 800 units partly completed which had the following values: Value GHC Percentage complete Input material (from process 1) 8,200 100 Material introduced 5,600 55 Labour 3,200 60 Overheads 2,400 45 During the period, 4300 units were manufactured from Process 1 at a value of GHC46,500. Other costs were: GHC Material introduced 24,000 Labour 19,500 Overheads 18,200 At the end of the year, the closing WIP was 600 units which were at the following stages of completion:- Input material - 100% complete Material introduced - 50% complete Labour - 45% complete Overheads - 40% complete The balance of 4500 was transferred to finished goods. Required: (i) Calculate the value of units transferred to finished goods and the value of WIP using the FIFO method. (ii) Prepare the Process 2 Account using the 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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