QUESTION 1 The manufacturing company TOKYO S.A. produces only one product. The production of the product is completed in two consecutive Departments, namely Department A and Department B. On 1/4/2021, Department B has in work in process 8,000 units. The cost was €34,095 for raw materials and €29,100 for direct labor. In April 2021, 20,000 product units were added to the production (from Department A), for processing for which the cost of raw materials is €133,905 and for direct labor €222,000. Considering the following information: On 30/4/2021, Department B has 13,000 units of product in work in process, processed by 30% for direct labor and manufacturing overheads. All raw materials are added to Department B at the beginning of the production process (i.e., they have a 100% completion rate). The manufacturing overhead is applied to Department B based on direct labor at a rate of 110%. The company uses the weighted-average method to assess its inventories. Requirements Calculate the following: The equivalent units (: Prepare the cost of goods manufactured ( : The cost per equivalent unit /, The total amount of cost for end work in process inventory and units transferred out of Department B-
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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