A firm operates a process, the details of which for the period were as follows. There was no opening work-in-progress. During the period 8,250 units were received from the previous process at a value of $453,750, labour and overheads were $350,060 and material introduced was $24,750. At the end of the period, the closing work-in-progress was 1,600 units, which were 100% complete in respect of materials, and 60% complete in respect of labour and overheads. The balance of units were transferred to finished goods. Requirements: Calculate the number of equivalent units produced. Calculate the cost per equivalent unit. Prepare the process account Distinguish between joint products, and by-products, and briefly explain the difference, in accounting treatment between them
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.
A firm operates a process, the details of which for the period were as follows. There was no opening work-in-progress. During the period 8,250 units were received from the previous process at a value of $453,750, labour and
Requirements:
- Calculate the number of equivalent units produced.
- Calculate the cost per equivalent unit.
- Prepare the process account
- Distinguish between joint products, and by-products, and briefly explain the difference, in accounting treatment between them
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