X Co. Ltd. produces three types of products A, B and C and keeps accounts for Process I, Process II and Process III. Following statements show the relative importance of each type of product in each process : Process I Points Process II Points Process III Points Product A Product B Product C 2 4 2 4 1 8 3 Costs for each process for March, 2019 are as follows : Process I Process II Process III Total $ 12,000 4,200 3,000 $ 9,000 3,000 5,100 Materials Labour 9,000 1,800 2,400 30,000 9,000 10,500 Overheads 19,200 17,100 13,200 49,500 Production during the period : Product A 600 units ; Product B 300 units ; Product C 900 units. You are required to- (a) prepare a statement showing weighted average production for each process and (b) compute the cost for each type of product.
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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