A factory produces three products L, M and N of equal value from the same manufacturing process. The costs before the split off point is RO 298,800. The number of units, Subsequent costs and profit percentages are given as under : Particulars M N No. of Units 10000 12000 16000 Selling Price per unit in RO 25 40 60 Subsequent costs per unit in RO 10 16 Estimated profit on Sales 20% 20% 10% Apportion the joint costs by using Reverse Cost Method and find profit. Subsequent Estimated Actual Joint Actual Total Actual I Profit Product Total Estimated Estimated Cost Cost Prorated Sales Value Profit Total Cost Processing Cost Joint Cost on Estimated Joint Costs (1) (2) (3) (4) (5)=(2-4) (6) (7) (8) (9) = 6+9 (2)-(9) %3D
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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