Vaasa Chemicals makes a product by way of two processes – Mixing & Refining. Its process costing system in the Mixing Department has two direct cost categories (Chemical P & Chemical Q) and one conversion costs pool. Chemical P is introduced at the start of the operations in the Mixing Department and Chemical Q is added when the product is three- fourths (75%) completed in the Mixing Department. The following information pertains to the Mixing department for July Units Work in process inventory, July 1 0 Started production 50,000 Completed and transferred to refining department 35,000 Ending work in process inventory [two – thirds (66 2/3 %) 15,000 of the way through the Mixing process) Costs Beginning WIP Inventory $0 Costs added during July: Chemical P 250,000 Chemical Q 70,000 Direct Labour 32,000 Manufacturing overhead 103,000 Required: iii) Prepare the journal entry to record the cost of the units completed and transferred out to the Refining Department. iv) Post the journal entries to the Work in Process Inventory – Mixing T-account. What is the ending balance?
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.
Vaasa Chemicals makes a product by way of two processes – Mixing & Refining. Its
Units
Work in process inventory, July 1 0
Started production 50,000
Completed and transferred to refining department 35,000
Ending work in process inventory [two – thirds (66 2/3 %) 15,000
of the way through the Mixing process)
Costs
Beginning WIP Inventory $0
Costs added during July:
Chemical P 250,000
Chemical Q 70,000
Direct Labour 32,000
Manufacturing
Required:
iii) Prepare the
iv)
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