XYZ Engine Corporation manufactures a single model of gasoline engine used in lawn mowers, portable generators, and pumps. The basic engine block is cast from steel and machined in the Casting Department. Then it is transferred to the Assembly Department, where the crank shaft, valves, pistons, and other components parts are added. After Assembly it is transferred to the Finishing Department where the engine is tested. The company uses a process cost system with an average cost flow assumption. Date related to June operations are: Using FIFO method compute for Equivalent unit for finishing department Total cost of units transferred out from finishing department Using average method compute for Equivalent unit for casting Cost of goods sold assuming there was no beginning or ending inventory of finished goods for the month.
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.
XYZ Engine Corporation manufactures a single model of gasoline engine used in lawn mowers, portable generators, and pumps. The basic engine block is cast from steel and machined in the Casting Department. Then it is transferred to the Assembly Department, where the crank shaft, valves, pistons, and other components parts are added. After Assembly it is transferred to the Finishing Department where the engine is tested. The company uses a
Using FIFO method compute for
- Equivalent unit for finishing department
- Total cost of units transferred out from finishing department
Using average method compute for
- Equivalent unit for casting
- Cost of goods sold assuming there was no beginning or ending inventory of finished goods for the month.
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