Al Habib manufacturer uses the FIFO method in its process costing system. The following information is available for the company for the month of February 2023. All materials are added at the start of production. All spoilage is abnormal and is detected by the final inspection at the end of the process. Beginning work in process (80% complete) 9,500 units Units Started 42,000 units Ending work in process (55% complete) 18,000 units Completed and transferred out 31,000 units Beginning work-in-process costs: Materials $14,000 Conversion $38,200 Current costs: Materials $50,750 Conversion $173,130 Required: Using the Microsoft Excel program, prepare a cost of production report for the company for the month of February 2023. Your report must be completed in a good format with all four steps in a typical process costing system.
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.
Al Habib manufacturer uses the FIFO method in its
|
Beginning work in process (80% complete) |
9,500 units |
|
Units Started
|
42,000 units |
|
Ending work in process (55% complete) |
18,000 units |
|
Completed and transferred out |
31,000 units |
|
Beginning work-in-process costs: |
|
|
Materials |
$14,000 |
|
Conversion |
$38,200 |
|
Current costs: |
|
|
Materials |
$50,750 |
|
Conversion |
$173,130 |
Required:
Using the Microsoft Excel program, prepare a cost of production report for the company for the month of February 2023. Your report must be completed in a good format with all four steps in a typical process costing system.
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