The ABC Company has two processing departments. All direct materials are added in Department 1 at the beginning of the process. Conversion Costs are incurred evenly throughout both processes. Data for the month of January are shown below: Department 1 Department 2 Units started in process 75,000 Units transferred to next dept. 60,000 Units transferred to finished goods inventory 55,000 15,000 (60% 5.000 (80% complete) Ending units in process complete) Costs added by department Direct materials 300.000 Direct labor 172,500 162,250 Manufacturing overhead 86.250 81,125 applied Prepare a Cost of Production Report.
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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