William Limited manufactures a unique hair oil branded Williamline. The product undergoes two manufacturing processes before emerging as a complete product. The following information relates to production undertaken during the month of September 2020. Process 1 2 Input 250,000 litres @ Sh. 62.50 per litre Added Costs: Material 5,750,000 4,606,250 Labour 4,812,500 3,806,250 Overhead 2,062,500 2,640,000 Normal loss 10% of input 5% of input Scrap value Sh. 18.75 per litre Sh. 42.50 per litre Output: To process 2:200,000 litres To finished goods To W.I.P CIF - Previous process costs - Added material - Labour - Overhead 162,500 litres 25,000 litres 100% 80% 70% 50% There was no opening work-in-progress in either of the two processes. Losses in process 2 had the following degree of completion: previous process costs 100%, added material 70%, labour 50% and overheads 50% Required: a) Process accounts for both processes for the month of September 2020
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.
William Limited manufactures a unique hair oil branded Williamline. The product undergoes two manufacturing processes before emerging as a complete product. The following information relates to production undertaken during the month of September 2020. Process 1 2 Input 250,000 litres @ Sh. 62.50 per litre Added Costs: Material 5,750,000 4,606,250 Labour 4,812,500 3,806,250 Overhead 2,062,500 2,640,000 Normal loss 10% of input 5% of input Scrap value Sh. 18.75 per litre Sh. 42.50 per litre Output: To process 2:200,000 litres To finished goods To W.I.P CIF - Previous
Step by step
Solved in 2 steps with 8 images
