A business plans for fixed production overheads of £200,000 and annual production of 400,000 units in its financial year. A fire at the factory results in production being only 300,000 units, with no saving in fixed production overheads. Based on the information above, what amount of unallocated overheads should be expensed in the Income Statement this year? Select one: a. £50,000 b. None of the other answers shown c. £200,000 d. £150,000 e. £12,500 f. £0
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.
A business plans for fixed production
Based on the information above, what amount of unallocated overheads should be expensed in the Income Statement this year?
None of the other answers shown
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