A certain company is selling a specific product with a selling price of P105.00. Data regarding costs incurred are as follows: Direct Materials P600,000 Direct Labor 400,000 Variable Factory Overhead 250,000 Fixed Factory Overhead 850,000 Variable Selling and Other Expenses Per Unit 2.50 Fixed Selling and Other Expenses 250,000 Data regarding units are as follows: Case A Case B Case C Beginning Inventory 20,000 15,000 5,000 Ending Inventory 10,000 15,000 25,000 Produced 50,000 25,000 40,000 Requirements: Compute for the product cost per unit for each case under both absorption costing and variable costing. Compute for the inventory cost for each case under both absorption costing and variable costing. Prepare an income statement for each case under both absorption costing and variable costing.
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 certain company is selling a specific product with a selling price of P105.00. Data regarding costs incurred are as follows:
| Direct Materials | P600,000 |
| Direct Labor | 400,000 |
| Variable Factory Overhead | 250,000 |
| Fixed Factory Overhead | 850,000 |
| Variable Selling and Other Expenses Per Unit | 2.50 |
| Fixed Selling and Other Expenses | 250,000 |
Data regarding units are as follows:
| Case A | Case B | Case C | |
| Beginning Inventory | 20,000 | 15,000 | 5,000 |
| Ending Inventory | 10,000 | 15,000 | 25,000 |
| Produced | 50,000 | 25,000 | 40,000 |
Requirements:
- Compute for the product cost per unit for each case under both absorption costing and variable costing.
- Compute for the inventory cost for each case under both absorption costing and variable costing.
- Prepare an income statement for each case under both absorption costing and variable costing.
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