Required:- Prepare cost of production report for the molding department.
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.
Dentex Plastics Corporation produces no breakable containers for cosmetics, using three departments: Mixing, Modling and Finishing. On January 01, 2009 molding department received 8000 units from mixing department @ Rs.10 per unit. 7000 units were transferred to finishing department. 500 units are still in process.
Cost added by the molding department:
Direct Material Rs.40,000
Direct Labour Rs.35,000
F.O.H Rs.10,000
Degree of Completion for in process inventory is as under:
50% complete as to direct material
25% complete as to direct Labour
10% complete as to FOH
Degree of Completion for units lost is as under:
30% complete as to direct material
50% complete as to direct Labour
10% complete as to FOH
Required:- Prepare cost of production report for the molding department.
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