Sinar Sdn Bhd produces a detergent known as “Turbo” which passes through two processes before completion. Data for the month of July 2010 were as follows: Process 1 Process 2 Total Direct materials (10,000 kg) RM5,000 - RM5,000 Material added RM3,000 RM2,000 RM,5000 Direct expenses RM1,000 RM1,000 RM2,000 Overhead (absorbed as a percentage of direct wages / proportion of direct wages) RM10,000
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.
Sinar Sdn Bhd produces a detergent known as “Turbo” which passes through two processes before completion. Data for the month of July 2010 were as follows:
|
|
Process 1 |
Process 2 |
Total |
|
Direct materials (10,000 kg) |
RM5,000 |
- |
RM5,000 |
|
Material added |
RM3,000 |
RM2,000 |
RM,5000 |
|
Direct expenses |
RM1,000 |
RM1,000 |
RM2,000 |
|
|
|
|
RM10,000 |
|
Direct labour |
800 hours |
600hrs |
|
|
Output |
9,800kg |
9,000kg |
|
|
Normal loss unit |
5% |
8% |
|
|
Scrap value /kg |
RM0.40 |
RM0.50 |
|
Additional information:
|
Wages rate per hour |
Process 1 |
Process 2 |
|
First 500 hours |
RM6.00 |
RM6.00 |
|
Next 500 hours |
RM7.00 |
RM7.00 |
Note: The price per unit is to be calculated to four decimal places.
Required:
1. Prepare Process 1 and Process 2 accounts (Show all workings)
2. Normal Loss Account
3. Abnormal loss/ Gain account (if any)
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