Blue Ribbon Flour Company manufactures flour by a series of three processes, beginning in the Milling Department. From the Milling Department, the materials pass through the Sifting and Packaging departments, emerging as packaged refined flour.The balance in the account Work in Process—Sifting Department was as follows on May 1:Work in Process—Sifting Department (1,500 units, 75% completed) $3,400The following costs were charged to Work in Process—Sifting Department during May:Direct materials transferred from Milling Department: 18,300 units $32,600Direct labor 14,560Factory overhead 7,490During May, 18,000 units of flour were completed and transferred to finished goods. Work in Process—Sifting Department on May 31 was 1,800 units, 75% completed.InstructionsPrepare a cost of production report for the Sifting Department for May, using the average cost method.
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.
Blue Ribbon Flour Company manufactures flour by a series of three processes, beginning in the Milling Department. From the Milling Department, the materials pass through the Sifting and Packaging departments, emerging as packaged refined flour.
The balance in the account Work in Process—Sifting Department was as follows on May 1:
Work in Process—Sifting Department (1,500 units, 75% completed) $3,400
The following costs were charged to Work in Process—Sifting Department during May:
Direct materials transferred from Milling Department: 18,300 units $32,600
Direct labor 14,560
Factory
During May, 18,000 units of flour were completed and transferred to finished goods. Work in Process—Sifting Department on May 31 was 1,800 units, 75% completed.
Instructions
Prepare a cost of production report for the Sifting Department for May, using the average cost method.
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