Acie Company has two service departments and three production departments, each producing a separate product. For a number of years, Acie has allocated the costs of the service departments to the production departments on the basis of the annual sales pesos. In a recent audit report, the internal auditor stated that the distribution of service department costs on the basis of annual sales pesos would lead to serious inequities. For illustration purposes, the following information was appended to the audit report: Service Departments Maintenance Engineering A 400 Producing Departments B 200 C Maintenance hours used 800 200 Engineering hours used Department direct costs 400 800 400 400 P12,000 P54,000 P80,000 P90,000 P50,000 30. Using the simultaneous method, what is the total cost of producing department A? 31. Using the simultaneous method, what is the total cost of producing department B? 32. Using the simultaneous method, what is the total cost of producing department C?
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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