The following partially completed process cost summary describes the July production activities of the Molding department at Ashad Company. Its production output is sent to the next department. All direct materials are added to products when processing begins. Beginning work in process inventory is 20% complete with respect to conversion. Equivalent Units of Production Direct Materials Conversion Units transferred out 38,500 EUP 38,500 EUP Units of ending work in process 3,000 EUP 1,800 EUP Equivalent units of production 41,500 EUP 40,300 EUP Costs per EUP Direct Materials Conversion Costs of beginning work in process $ 25,350 $ 3,200 Costs incurred this period 460,200 254,720 Total costs $ 485,550 $ 257,920 Units in beginning work in process (all completed during July) 2,500 Units started this period 39,000 Units completed and transferred out 38,500 Units in ending work in process 3,000
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 following partially completed
| Equivalent Units of Production | Direct Materials | Conversion | ||||
| Units transferred out | 38,500 | EUP | 38,500 | EUP | ||
| Units of ending work in process | 3,000 | EUP | 1,800 | EUP | ||
| Equivalent units of production | 41,500 | EUP | 40,300 | EUP | ||
| Costs per EUP | Direct Materials | Conversion | ||||||
| Costs of beginning work in process | $ | 25,350 | $ | 3,200 | ||||
| Costs incurred this period | 460,200 | 254,720 | ||||||
| Total costs | $ | 485,550 | $ | 257,920 | ||||
| Units in beginning work in process (all completed during July) | 2,500 |
| Units started this period | 39,000 |
| Units completed and transferred out | 38,500 |
| Units in ending work in process | 3,000 |
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