Susu Segar Sdn Bhd is the producer of dairy products. One of its products, Milky is the main product for the company. The production of Milky involves two sequential processing departments namely Freezing Department and Packaging Department. In Freezing Department, all direct materials are added at the beginning of the process. Whereas in Packaging Department, all direct materials are added at the ending of the process. Conversion cost occurs uniformly throughout the production process for both departments. The following information relates to Packaging Department for the month of October 2006: Cost of beginning work in process inventory: Transferred-in Direct materials Direct labour Manufacturing overhead Percentage of completion (conversion cost): Beginning work in process inventory Ending work in process inventory RM61,000 RM69,000 RM40,000 RM24,200 60% 70% Cost in the current period: Direct materials Direct labour Manufacturing overhead RM138,000 RM38,800 RM32,000 Additional information: Beginning work in process inventory (units) 32,000 Units started in the month of October 67,000 Units completed and transferred out 69,000 Ending work in process inventory (units) 30,000 Transferred out cost from Freezing Department RM335,000 REQUIRED: (a) Prepare a production report for Packaging Department using the weighted-average method. (b) Prepare a production report for Packaging Department using the first-in, first-out (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.
Susu Segar Sdn Bhd is the producer of dairy products. One of its products, Milky is the main product for the company. The production of Milky involves two sequential processing departments namely Freezing Department and Packaging Department. In Freezing Department, all direct materials are added at the beginning of the process. Whereas in Packaging Department, all direct materials are added at the ending of the process. Conversion cost occurs uniformly throughout the production process for both departments.
The following information relates to Packaging Department for the month of October 2006:
|
Cost of beginning work in process inventory: Transferred-in Direct materials Direct labour Manufacturing Percentage of completion (conversion cost): Beginning work in process inventory Ending work in process inventory |
RM61,000 RM69,000 RM40,000 RM24,200
60% 70% |
|
Cost in the current period: Direct materials Direct labour Manufacturing overhead |
RM138,000 RM38,800 RM32,000 |
Additional information:
|
Beginning work in process inventory (units)
|
32,000
|
|
Units started in the month of October
|
67,000
|
|
Units completed and transferred out |
69,000
|
|
Ending work in process inventory (units)
|
30,000
|
|
Transferred out cost from Freezing Department |
RM335,000 |
REQUIRED:
(a) Prepare a production report for Packaging Department using the weighted-average method.
(b) Prepare a production report for Packaging Department using the first-in, first-out (FIFO) method.
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