Alien is the cost supervisor at the production department for a bakery chain store called Lofa Bakery in Alor Setar. This bakery produces three types of products, namely cupcakes, doughnuts and curry puffs. The following information rates to the bakery operations for the year ending 31 December 2020. The total production costs are given below: Cost pools Machining Set-up costs Packaging Inspection RM 8,000 5,500 4,200 2,800 Output (units) 500 Machine Direct materials Direct labour 750 kg 100 kg 50 kg 150 hours Cupcakes Doughnuts Curry puffs 50 hours 60 hours 80 hours 60 hours 40 hours 300 200
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.
![The direct labour rate is RM1.50 per hour and the direct materials cost is RM1.20 per kg.
The production manager and the cost supervisor have arrived at the following cost driver
basis:
Cost driver
Cost pools
Machining
Set-up costs
Packaging
Inspection
Machine hours
Direct materials (kg)
Number of units produced
Number of units produced
Required:
a) Using the ABC approach, calculate the production cost per unit.
b) Using traditional costing approach, compare the cost per unit for each of the products.
C) Why is there a difference between the traditional and ABC approach of calculating the
total cost per unit?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7a5193bf-30cb-4322-843c-6b483d718928%2F9c8059b7-77ac-4dfe-95b4-228a673cc4b5%2Fk0eioy_processed.jpeg&w=3840&q=75)
![Question 6
Alien is the cost supervisor at the production department for a bakery chain store called
Lofa Bakery in Alor Setar. This bakery produces three types of products, namely
cupcakes, doughnuts and curry puffs. The following information rates to the bakery
operations for the year ending 31 December 2020.
The total production costs are given below:
RM
Cost pools
Machining
Set-up costs
Packaging
Inspection
8,000
5,500
4,200
2,800
Direct materials
750 kg
100 kg
50 kg
Output (units)
Machine
Direct labour
500
50 hours
150 hours
Cupcakes
Doughnuts
Curry puffs
300
60 hours
60 hours
200
80 hours
40 hours](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7a5193bf-30cb-4322-843c-6b483d718928%2F9c8059b7-77ac-4dfe-95b4-228a673cc4b5%2Fzxs9sme_processed.jpeg&w=3840&q=75)
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