The Baker Company manufactures a product in a single process. The following information is available: Input material 5,000 kilos valued at $18,000 Material added $4,000 Direct labour cost incurred $14,000 Manufacturing overhead incurred $20,500 Normal losses 10% of input Scrap value of losses $5.00 per unit Units completed and transferred out 4,300 units i) Calculate the cost per completed unit ii) What is the value of the units completed and transferred to finished goods? iii) What is the value of the unexpected losses? iv) What is the manufacturer’s true loss? v) Prepare the journal entries necessary to record the assignment of direct materials and direct labour and the allocation of manufacturing overhead to the process. Also, give the journal entries for the transfer of units completed to Finished Goods Inventory.
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.
The Baker Company manufactures a product in a single process. The following information is
available:
Input material 5,000 kilos valued at $18,000
Material added $4,000
Direct labour cost incurred $14,000
Manufacturing
Normal losses 10% of input
Scrap value of losses $5.00 per unit
Units completed and transferred out 4,300 units
i) Calculate the cost per completed unit
ii) What is the value of the units completed and transferred to finished goods?
iii) What is the value of the unexpected losses?
iv) What is the manufacturer’s true loss?
v) Prepare the
direct labour and the allocation of manufacturing overhead to the process. Also, give the
journal entries for the transfer of units completed to Finished Goods Inventory.
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