Balkan Bhd, manufatures a caulking compound that goes through three processing stage prior to completion. Information on work in the first department, Cooking Department, is given below for May: Production data: Pounds in process, May 1; 10,000 (materials 100% complete; conversion 80% complete) Pounds started into production during May 100,000 Pounds in process, May 31; 15,000 (materials 60% complete; conversion 20% complete) Cost data: Work in process inventory, May 1: Materials cost RM1,500 Conversion cost RM7,200 Cost added during May: Materials cost RM154,500 Conversion cost RM90,800 You need to prepare the cost reconciliation report for this process costing, but you are not sure which method is the most suitable method to be implemented in the company. You need to analyse which of these methods, either weighted average costing method or first in first out costing method give higher cost of the finished goods and explain the differences between the two costing methods. The report must also include a physical flow schedule and an equivalent unit schedule.
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.
Question 2
Balkan Bhd, manufatures a caulking compound that goes through three processing stage prior to completion. Information on work in the first department, Cooking Department, is given below for May:
Production data:
Pounds in process, May 1; 10,000
(materials 100% complete; conversion 80% complete)
Pounds started into production during May 100,000
Pounds in process, May 31; 15,000
(materials 60% complete; conversion 20% complete)
Cost data:
Work in process inventory, May 1:
Materials cost RM1,500
Conversion cost RM7,200
Cost added during May:
Materials cost RM154,500
Conversion cost RM90,800
You need to prepare the cost reconciliation report for this
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