Tantum Pty Ltd ("Tantum") manufactures rubber raw material (a single product) that is sold to other companies that further process it to their specifications. Tantum uses a process costing system. Tantum has a 31 December year-end. Tantum recorded the following information for the month of December 2021: Units Opening work in progress (opening WIP") (01 December.): 40% complete: 10 000 Closing work in progress ("closing WIP") (31 December.) 70% complete 15 000 New units put into production in December 2021 120 000 Completed in December 2021 90 000 Additional information: Raw materials are added at the beginning of the process and conversion takes place evenly throughout the process. Normal losses are estimated at 6% of the units that reach/pass the wastage point. Normal losses occur when the process is 75% complete. Tantum uses the First-In-First-Out (FIFO) method of inventory valuation. The cost information as as follows: R Opening WIP Raw materials 75 000 Conversion 17 200 Added during December 2021 Raw materials 950 200 Conversion 520 185 (a) Prepare Tantum's quantity statement for the month of December 2021. (b) Prepare Tantum's production cost statement for the month of December 2021.
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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