Direct material 6.50SAR Conversion 12.50SAR Total manufacturing cost 19.00SAR Beginning WIP 20,000 units (100% DM; 80% conversion) Started in June 180,000 units Completed in June 140,000 units
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.
Mirror Products manufactures mirrors and uses a standard
The following production and cost data are based on June 2022. This information represents the
|
Direct material |
6.50SAR |
|
Conversion |
12.50SAR |
|
Total |
19.00SAR |
|
Beginning WIP |
20,000 units (100% DM; 80% conversion) |
|
Started in June |
180,000 units |
|
Completed in June |
140,000 units |
|
Ending WIP |
??? (100%DM 60% conversion) |
|
Actual costs for June: |
|
|
Direct material |
1,500,000SAR |
|
Conversion |
2,000,000SAR |
|
Total actual cost |
3,500,000SAR |
1. Prepare an equivalent unit of production schedule.
2. Prepare a cost of production report and assign costs to goods transferred and to inventory.
3. Compute the direct material variance and conversion cost variance. Show all work. What is the total amount to be booked against the cost of goods sold?
4. Based on your analysis above, does this product appear to be a good source of income for the firm? Should it continue operations? Why or why not?
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