Blue Company makes three products in a single facility. Data concerning these products follow: Products A B Selling price per unit $67.90 $57.70 $43.90 Direct materials $12.10 $10.30 $8.60 Direct labour $14.10 $8.00 $6.80 Variable manufacturing overhead Variable selling cost per unit $2.60 $2.20 $1.80 $2.50 $2.20 $2.50 Mixing minutes per unit 2.70 3.30 4.70 Direct materials in KG per unit 7.52 13.25 4.80 Monthly demand in units 1,000 3,000 3,000 The mixing machines and direct materials used are potentially constraints in the production facility. A total of 25,000 minutes are available per month on these machines. Direct labour is a variable cost in this company. Total direct materials available are 40,000 kg. Required: 1.) In what order should Blue Company produce its products if mixing minutes per unit are the only production constraint? 2) in what order should Blue Company produce its products if direct materials used are the only production constraint?
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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