A product passes through two processes A and B. During the month ended June, 1,500 products were produced. The detailed cost break up is as follows: Process A Process B Direct materials P90 000 P75 000 Direct Labour P75 000 P150 000 Direct expenses P15 000 P18 000 Indirect overhead cost during the period were P60,000 apportioned to the processes based on direct labour costs. No work in progress existed at the beginning and end of the period. Required: Prepare relevant process accounts.
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.
A product passes through two processes A and B. During the month ended June, 1,500
products were produced. The detailed cost break up is as follows:
Process A Process B
Direct materials P90 000 P75 000
Direct Labour P75 000 P150 000
Direct expenses P15 000 P18 000
Indirect
direct labour costs. No work in progress existed at the beginning and end of the period.
Required:
Prepare relevant process accounts.
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