A Company produces items to order and had the following budgeted overheads for the year on normal activity levels. Department Budgeted Overheads Overhead Absorption Base Assembly 36 000 1 500 per labour hours Machining 86 000 2 500 per machine hours. Painting 40 000 1 800 per labour hours Packing 30 000 1 000 per labour hours Selling and administrative overheads are 10% of Factory Cost. The company received an order for 500 widgets, made as Batch 2024 and incurred the following costs: Materials: $6214 Labour: Assembly Dept: 256 hours (2) $4.25 per hour Machining Dept. 904 hours $2.50 per hour Painting Dept. 180 hours @ $3.25 per hour Packing Dept. 350 hours (a) $5.25 per hour Required: A. The unit cost and profit per assembly if selling price was $300 per assembly, B. Distinguish between job and batch costing, citing TWO (2) examples of industries that would employ each
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 Company produces items to order and had the following budgeted
Department Budgeted Overheads Overhead Absorption Base
Assembly 36 000 1 500 per labour hours
Machining 86 000 2 500 per machine hours.
Painting 40 000 1 800 per labour hours
Packing 30 000 1 000 per labour hours
Selling and administrative overheads are 10% of
Materials: $6214
Labour:
Assembly Dept: 256 hours (2) $4.25 per hour
Machining Dept. 904 hours $2.50 per hour
Painting Dept. 180 hours @ $3.25 per hour
Packing Dept. 350 hours (a) $5.25 per hour
Required:
A. The unit cost and profit per assembly if selling price was $300 per assembly,
B. Distinguish between job and batch costing, citing TWO (2) examples of industries that would employ each....
Job costing is a costing technique that entails providing specialized manufacturing of goods or services. The costing approach is applied when tasks are carried out for several clients in accordance with their requests. Each cost unit is viewed as a separate entity under this method for cost reasons.
One way to think of batch costing is as a subset of task costing. In this technique, the cost unit used to estimate cost is a batch of related, identical units. The entire cost of the batch is divided by the number of units generated in a batch to determine the cost per unit.
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