Question 2 Product X passes through 2 process to completion. In period 2, the cost of production was as follows: Direct materials Direct Labour Direct Expenses Process 2 Prepare the following accounts: Process account 1 Process account 2 Abnormal loss Actual output for each process was as follows: Process 1 1,760 units Process 2 1,600 units 1. Process 1 Production overheads for the period amounted to $4,988 and are allocated to each process on the basis of 100% of the cost of direct labour. 2. $5,024 $2,020 $3,144 2,000 units at $6 per unit were issued to process 1. Normal loss of units per process was estimated as follows: Process 1 10% scrap is sold for $2 per unit 10% scrap is sold for $4 per unit 3. Abnormal gain Process 2 $8,496 $2,968 $3,828
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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