A company manufactures four products (P, Q, R and S). The products are manufactured on a bank of 20 machines, any of which can be used on each of the products. Each machine can produce 101 hours of work per period. The following information is provided for the next period: P 60 RM104 4.0hrs RM40 5.0hrs RM6.00 Units required Selling price (per unit) Direct labour (per unit) Direct materials (per unit) Machine hours (per unit) Fixed overheads (per unit) Fixed overheads for the period are RM1,720 Direct labour costs RM8.00 per hour Q 100 RM76 2.0hrs RM24 4.0hrs RM3.00 R 200 RM72 2.5hrs RM29 3.0hrs RM2.00 S 150 RM92 3.0hrs RM38 6.0hrs RM5.00 Required: (a) Calculate the production capacity shortfall (in machine hours) in the next period. (b) Determine the production quantities of each product which will maximise profit in the next period.
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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