Honesty Manufacturing Company manufactures a standard recliner. During December, the firm’s Assembly Department started production of 75,000 chairs. During the month, the firm completed 80,000 chairs and transferred them to the Finishing Department. The firm ended the month with 10,000 chairs in ending inventory that are 80% completed. There were 15,000 chairs in beginning inventory that are 30% completed. All direct materials costs are added at the beginning of the production cycle, and conversion costs are added uniformly throughout the process. The FIFO method is used. Direct Materials Conversion Costs Beginning inventory P 84,000 P 122,500 Costs added 588,000 970,270 The cost of the units completed during December is
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.
Honesty Manufacturing Company manufactures a standard recliner. During December, the firm’s Assembly Department started production of 75,000 chairs. During the month, the firm completed 80,000 chairs and transferred them to the Finishing Department. The firm ended the month with 10,000 chairs in ending inventory that are 80% completed. There were 15,000 chairs in beginning inventory that are 30% completed. All direct materials costs are added at the beginning of the production cycle, and conversion costs are added uniformly throughout the process. The FIFO method is used.
Direct Materials Conversion Costs
Beginning inventory P 84,000 P 122,500
Costs added 588,000 970,270
The cost of the units completed during December is
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