A company uses a process cost accorinting system using the weighted average cost flow assumption. Its Assembly Department's beginning work in process inventory consisted of 50,000 units, 75% complete with respect to direct labor and manufacturing overhead. The department started and finished 127,500 units this period. The ending work in process inventory consists of 40,000 units that are 25% complete with respect to direct labor and manufacturing overhead. All direct materials are added at the beginning of the process. The department incurred direct labor costs of $240,000 and manufacturing overhead costs of $320,000 for the period. The conversion cost per equivalent unit is: $3.294.
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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