What is the value assigned to the by-product and removed from the work in process at the point of separation? In department two of Maysobra company, a by- product is removed. The material is further processed and then sold. The company uses the reversal cost method to account for the by- product. Data for the by-product follows: Units Sales price Further processing cost Selling and Admin Expenses 20% of sales Normal Profit 6,000 kgs P3/kg PO.80 10% of sales What is the value assigned to the by-product and removed from the work in process at the point of separation? P7,800 P8,800 P9,500 P7,500
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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