company produces You are a management accountant of EON and Brothers Ltd., a manufacturing that two products simultaneously in one of their production plants. You are asked to produce a management report on costing techniques. This company follows a traditional approach to costing and absorbs production overhead using machine hours. The company's policy is to add a 50% markup on the unit cost to obtain the selling price. The relevant information is given below: EON and Brothers Ltd. produces two similar products called Alfa and Beta. Total Overheads = £155,000 Machine Hours = 58980 hrs Product Alfa Beta Production Units 2,580 5,100 Material Cost per unit £31 £51 Labour Cost per unit £21 £17 Machine Hours per unit 11 6 After discussing with all the important people of the production plant you have allocated the overhead costs as mentioned below: % Overheads Set up Costs 30 Inspections 40 Materials Handling 30 Cost Pools are as mentioned below: Alfa Beta Total Setups 400 65 465 Inspections 500 275 775 Goods Movements 625 1,700 2,325
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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