A business operated at 100% of capacity during its first month, with the following Sales (90 units) $90,000 Production costs (100 units): Direct materials Direct labor Variable factory overhead Fixed factory overhead Operating expenses: Variable operating expenses $40,000 20,000 2,000 7,000 Ca. $27,900 Ob. $21,000 Oc. $18,900 $18.000 $8,000 1,000 69,000 Fixed operating expenses 9,000 The amount of gross profit that would be reported on the absorption costing income statement is
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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