The Lakers Corporation uses a joint manufacturing process that produces three products. The process produced 1,000 units of Product A, 500 units of Product B, and 500 units of Product C in January. The joint cost incurred in this process is $200,000. All three products can be sold at the split-off point; $20 for Product A, $200 for Product B, and $160 for Product C. Alternatively, the products can be processed further and sold at a final stage. The following information relates to processing these products further: Final Selling Price $ 40 300 180 Separable Costs $15,000 30,000 2,000 Product A B' At the inventory at the end of January includes 100 units of Product A, 300 units of Product B, and 200 units of Product C. Required: a. Calculate the value of ending inventory of the three products based on (1) the sales value at split-off and (2) the physical measures approach using units. b. Assume that product A is a byproduct and joint costs are allocated based on number of units. Lakers recognizes byproducts as a cost reduction at either (1) production or (2) sales. Based on this information, calculate the value of ending inventory for products A, B, and C.
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.
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