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
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 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 (66⅔%)of the way through
the Mixing process] -15,000
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
iii) Prepare the
to the Refining Department.
iv)
the ending balance?
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