4. The production department of a factory furnishes the following information for the month of October. Materials Used RO 125,000 Direct Wages RO 85,000 Labor hours worked 26,000 Hours of machine operation 40,000 Overhead cost RO 60,000 For an order executed by the department during the period, the relevant information was as under: Materials used RO 10,000 Direct Wages RO 7,000 Labor hours worked 4,000 Hours of machine operation 3,500 You are required to calculate the overhead chargeable to the job on order by the following methods: a. Percentage of direct materials cost b. Percentage of labor hour cost c. Direct labor hour rate d. Machine hour rate
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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