XYZ, Inc. has two departments in its operation, Department ABC and DEF. The data for the month of September were as follows: Department ABC Department DEF Unit in beg. Inventory ABC (1/2 complete) 4,000 DEF (3/4 complete) 400 Units started in process 14,000 Units transferred to Department DEF 18,000 Units transferred to warehouse 17,000 Units in ending inventory: ABC (1/8 incomplete) 2000 DEF (1/4 incomplete) 2,500 Costs in beginning inventory: Costs from preceding department RS 10,500 materials RS 15,150 6,250 labor 13,375 8,000 factory overhead 13,375 8,000 Costs added during the current period: materials 92,500 53,000 labor 132,575 74,100 Overhead 132,575 111,150 Department 1: Materials are applied as follows; 20% materials at the start of the production; 25% materials upon reaching 50% completion; 15% materials upon reaching 60% completion; 30% materials at 85% stage of completion and the balance of materials at the end of production. Labor and overhead are applied uniformly throughout the production. Department 2: Materials are all applied at the beginning of the production, while labor and overhead are applied evenly throughout the production. Requirement: Prepare the cost of production reports for department ABC and DEF show the solution clearly for review purposes
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.
XYZ, Inc. has two departments in its operation, Department ABC and DEF. The data for the month of September were as follows:
| Department ABC | Department DEF | |
| Unit in beg. Inventory | ||
| ABC (1/2 complete) | 4,000 | |
| DEF (3/4 complete) | 400 | |
| Units started in process | 14,000 | |
| Units transferred to Department DEF | 18,000 | |
| Units transferred to warehouse | 17,000 | |
|
Units in ending inventory: |
||
| ABC (1/8 incomplete) | 2000 | |
| DEF (1/4 incomplete) | 2,500 | |
| Costs in beginning inventory: | ||
| Costs from preceding department | RS 10,500 | |
| materials | RS 15,150 | 6,250 |
| labor | 13,375 | 8,000 |
| factory |
13,375 | 8,000 |
| Costs added during the current period: | ||
| materials | 92,500 | 53,000 |
| labor | 132,575 | 74,100 |
| Overhead | 132,575 | 111,150 |
Department 1: Materials are applied as follows; 20% materials at the start of the production; 25% materials upon reaching 50% completion; 15% materials upon reaching 60% completion; 30% materials at 85% stage of completion and the balance of materials at the end of production. Labor and overhead are applied uniformly throughout the production.
Department 2: Materials are all applied at the beginning of the production, while labor and overhead are applied evenly throughout the production.
Requirement: Prepare the cost of production reports for department ABC and DEF
show the solution clearly for review purposes
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