A company has the choice of either selling 600 apples or processing them into applesauce. The company could sell the apples as is for $2.00 per unit. Alternatively, each apple could be made into one unit of applesauce with incremental costs of $0.60 per unit for direct materials, $1.00 per unit for direct labor, and $0.80 per unit for overhead, and then sold for $5.00 each. What is the amount of incremental revenue from processing the apples into applesauce? $3.00 per unit. $5.00 per unit.
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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