( a ) Period cost ( b ) Expected manufacturing overhead cost for a production level of 60,000 units. Zou Pty Ltd prepared a summary showing the following expected costs for a production level of 50,000 units: Direct labour $ 80,000 Fixed manufacturing overhead 60,000 Fixed selling and administration 110,000 Variable manufacturing overhead 30,000 Variable manufacturing 250,000 Variable selling 70,000 Zou Pty Ltd accounts for all manufacturing costs as inventorial (product) costs. COST SHEET Direct Labour $80,000.00 Direct Material 0 Prime Cost $80,000.00 Fixed Manufacturing Overhead $60,000.00 Variable Manufacturing Overhead 30,000.00 Variable Manufacturing 250,000.00 Conversion Cost $420,000.00 Variable Setting $70,000.00 Fixed Selling and Administration 110,000.00 Product Cost $600,000.00
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 ) Period cost
( b ) Expected manufacturing
Zou Pty Ltd prepared a summary showing the following expected costs for a production level of 50,000 units:
|
Direct labour |
$ 80,000 |
|
Fixed manufacturing overhead |
60,000 |
|
Fixed selling and administration |
110,000 |
|
Variable manufacturing overhead |
30,000 |
|
Variable manufacturing |
250,000 |
|
Variable selling |
70,000 |
Zou Pty Ltd accounts for all
|
COST SHEET |
|
|
Direct Labour |
$80,000.00 |
|
Direct Material |
0 |
|
Prime Cost |
$80,000.00 |
|
Fixed Manufacturing Overhead |
$60,000.00 |
|
Variable Manufacturing Overhead |
30,000.00 |
|
Variable Manufacturing |
250,000.00 |
|
Conversion Cost |
$420,000.00 |
|
Variable Setting |
$70,000.00 |
|
Fixed Selling and Administration |
110,000.00 |
|
Product Cost |
$600,000.00 |
|
|
|
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