Process Costing-A Simple Illustration(Part2)

November 17th, 2007 Comments off
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Append below a illustration of a simple set of process costing where there are merely two processes, without any work-in-process and finished stock account.

Illustration Of a Simple Process Costing
Process 1 Process 2

Material

15,000

Labor 20,000 $25,000
Manufacturing expenses 5,000 $5,000
40,000 $30,000

Production for the period is 1,000 unit.

Show the total cost of the finished goods and the process for each phase of the production

Solution:

PROCESS 1

Units Cost $ Units $
1,000 Material 15,000 1,000 Transfer to Process 2 40,000
Labor 20,000
Manufacturing expenses 5,000
40,000 40,000

Average cost per unit=$40,000/1,000=$40.00

PROCESS 2

Units Cost $ Units $
1,000 Costs transferred from Process 1 40,000 1,000 Transfer to Finished Stock A/c 70,000
Labor 25,000
Manufacturing expenses 5,000
40,000 40,000

Average cost per unit=$70,000/1,000=$70.00

FINISHED STOCK ACCOUNT

Units Cost $ Units $
1,000 Costs transferred from Process 2 70,000

 

 

 

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Financial Accounting

 
 

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