J & G Distilleries makes one of its products by way of three separate stages. Details ofproduction for the month ending 31st January were as follows:ProcessFermenting Distilling BottlingInput material: 65,000 litres $780,000 - -Material added - $89,000 -Direct Labour cost $114,600 $153,500 $225,600Manufacturing Overhead $122,000 $126,000 $193,100Normal losses 8% 5% 5%Output 55,000 litres 53,000 litres 48,000 litresScrap value of losses - $18.00/litre $30.00/litreThe nature of the process requires equipment to be cleaned at the end of each month; hencethere is no opening or closing stock of product in process.Required:i) The process account for each process: andii) The abnormal loss/gain account(s) showing J & G’s true loss/gain
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.
J & G Distilleries makes one of its products by way of three separate stages. Details of
production for the month ending 31st January were as follows:
Process
Fermenting Distilling Bottling
Input material: 65,000 litres $780,000 - -
Material added - $89,000 -
Direct Labour cost $114,600 $153,500 $225,600
Manufacturing
Normal losses 8% 5% 5%
Output 55,000 litres 53,000 litres 48,000 litres
Scrap value of losses - $18.00/litre $30.00/litre
The nature of the process requires equipment to be cleaned at the end of each month; hence
there is no opening or closing stock of product in process.
Required:
i) The process account for each process: and
ii) The abnormal loss/gain account(s) showing J & G’s true loss/gain
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