WIP, BEg. WIP, BEg. 4,000 gallons WIP, End Materials, chemicals P456,000 Materials, chemicals (? complete) Materials, chemicals (100% complete) Labor - P100 per hour P62,500 Materials, cans (complete ?) Materials, cans (? complete) Overhead P18,750 Labor (75% incomplete) Labor (20% incomplete) Overhead (75% incomplete) Overhead (20% incomplete) Cost added Start
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 date were provided by DARKNESS COMPANY:
| WIP, BEg. | WIP, BEg. | 4,000 gallons | WIP, End | |
| Materials, chemicals | P456,000 | Materials, chemicals (? complete) | Materials, chemicals (100% complete) | |
| Labor - P100 per hour | P62,500 | Materials, cans (complete ?) | Materials, cans (? complete) | |
| P18,750 | Labor (75% incomplete) | Labor (20% incomplete) | ||
| Overhead (75% incomplete) | Overhead (20% incomplete) | |||
| Cost added | Started during the month | 21,000 gallons | ||
| Materials, chemicals | P2,284,000 | Transferred to Shipping department during the month | 20,000 gallons | |
| Materials, Cans | P70,000 | |||
| Labor (P100 per hour) | P350,000 | |||
| Overhead | P105,000 |
Production begins with the blending of various chemicals, which are added at the beginning of the process and ends with canning of the product. Canning occurs when the mixtures reach the 90% stage of completion. The gallon cans are then transferred to the shipping department for crafting and shipment. Direct labor and overhead are added continously throughout the process. Overhead is allocated on the basis of direct labor hours at the rate of P30 per hour. Using FIFO compute for the cost of the WIP, end.
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