ing the month 90,000 units Ending WIP Inventory (100% complete as to material; 40% complete as to direct labor; 80% co
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.
In a single process production system, Decent Co produces wool gloves. For November 2020, the
company’s accounting records reflected the following :
Beginning WIP Inventory (100% complete as to material;
40% complete as to direct labor; 60% complete as to overhead) 12,000 units
Units started during the month 90,000 units
Ending WIP Inventory (100% complete as to material;
40% complete as to direct labor; 80% complete as to overhead) 20,000 units
Cost component November 1 During November
Direct material Rs. 13,020 Rs. 146,100
Direct labor 1,908 45,792
Overhead 4,636 70,824
Required:
1. For November , prepare a cost of production report assuming that the company uses the
weighted average method.
2. Would the weighted average costing method result into true costing of products. Explain with
cogent reasons.
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