Concord Corporation manufactures a single product. The standard cost per unit of product is shown below. Direct materials-1 pound plastic at $6.00 per pound Direct labor-2.00 hours at $12.20 per hour Variable manufacturing overhead Fixed manufacturing overhead Total standard cost per unit Direct materials (3,600 pounds) Direct labor (6,650 hours) Variable overhead Fixed overhead Total manufacturing costs $22,320 83,790 66,638 The predetermined manufacturing overhead rate is $14 per direct labor hour ($28.00 +2.00). It was computed from a master manufacturing overhead budget based on normal production of 10,000 direct labor hours (5,000 units) for the month. The master budget showed total variable costs of $75,000 ($7.50 per hour) and total fixed overhead costs of $65,000 ($6.50 per hour). Actual costs for October in producing 3,400 units were as follows. 30,462 $6.00 $203,210 24.40 15.00 13.00 $58.40 The purchasing department buys the quantities of raw materials that are expected to be used in production each month. Raw materials inventories, therefore, can be ignored.
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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