The manufacture of product "Fanta" requires three distinct processes. On completion of the product is passed from Process 3 to finished stock. During the month of December 1992, the following information was obtained: Elements of Costs Total Rs. Process 1 Process 2 Process 3 Direct materials 26,000 15,000 11,000 - Direct labour 26, 500 12,500 6000 8000 Direct expenses 8,000 3,000 - 5000 Production Overhead 79, 500 Production Overhead is absorbed by processes at a percentage of direct wages. Production during the period was 1,000 kgs. There was no stock of raw materials or work-in-progress at the beginning or at the end of the month.
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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