Required: (a) Prepare, showing all relevant workings: (i) The main process account (ii) The normal loss account (iii) The abnormal gain account. (b) The finished output is divided in the ratio 3:2 to produce the “Domestic” and the “Fragrant” brands. Perfume is added to the Fragrant brand at a cost of K0.5 per kilo. Packaging costs are K0.2 per kilo for the Domestic brand, and K0.4 per kilo for the Fragrant brand.If each kilo of finished output yields twenty bars of soap,calculate the cost of one bar of soap for each of the Domestic and the Fragrant brand.
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.
WashLtd operates a single process to manufacture soap.The following figures relate to a recent period.
Input Material 20,000 kilos at K5 per kilo
Labour 16,000 hours at K6.25 per hour
There is an expected loss of 5% of input weight, which can be sold for K1.2 per kilo.
The actual output for the period was 18,800 kilos and the closing work in progress was 1,000 kilos, which was complete as to material and 50% complete as to labour and overhead.
Required:
(a) Prepare, showing all relevant workings:
(i) The main process account
(ii) The normal loss account
(iii) The abnormal gain account.
(b) The finished output is divided in the ratio 3:2 to produce the “Domestic” and the “Fragrant” brands. Perfume is added to the Fragrant brand at a cost of K0.5 per kilo.
Packaging costs are K0.2 per kilo for the Domestic brand, and K0.4 per kilo for the Fragrant brand.If each kilo of finished output yields twenty bars of soap,calculate the cost of one bar of soap for each of the Domestic and the Fragrant brand.
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