Victorious Company manufactures two types of Electronic Toy, the Regular and SuperPro. The following data have been obtained: Regular Super Pro Direct material cost per unit Direct labor cost per unit P33 Р38 P32 P44 12,000 2,000 Direct labor hours 3,000 Machine hours 4,000 Engineering hours Number of set ups Number of units 450 450 5 20 8,000 2,200 Currently, overhead costs are assigned to products on the basis of direct labor hours, but the company decided to adopt the ABC method of cost allocation. The overhead consists of the following items: Overhead Cost Item Cost Driver Amount Setup costs No. of setups P250,000 Engineering costs No. of engineering hours 180,000 Machine costs No. of machine hours 900,000
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.
Using ABC, the total
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