Al Noor Manufacturing LLC is involved in manufacturing of consumer goods. The company has received an order (job) from Al Sham Production LLC. The management of the company has provided you with the following cost data based on the past information related to similar job. Find the profit and sales value that should be quoted for the job the company has received. Direct Material RO 3,000, Selling Overheads RO 1,200, Direct Expenses RO 800, General Overheads is 10% of works cost, Direct Labor is 40% of direct material, Profit is 20% on sales, Factory overhead is 60% of the prime cost. a. Profit RO 12,500, Sales value RO 2,500 b. Profit RO 2,500, Sales value RO 12,500 c. Profit RO 5,200, Sales value RO 15,200 d. Profit RO 15,200, Sales value RO 5,200
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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