Direct distribution method Sequential distribution or step-down method
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.
Bellevue Equipment Company is divided into five departments that consist of three producing departments (Machining, Assembly, and Finishing) and two service departments (Building Maintenance and Storeroom).
During March 2015, the following factory overhead was incurred for the various departments:
Machining ₱140,000
Assembly 160,000
Finishing 80,000
Building Maintenance 63,000
Storeroom 30,000
The bases for distributing service department expenses to the other departments were:
Bldg Maintenance--- on the basis of square meters of floor space occupied:
Machining, 3,000 SQM
Assembly, 5,000 SQM
Finishing, 1,000 SQM
Storeroom, 1,000 SQM
Storeroom--- on the basis of the number of materials requisitions processed:
Machining, 600
Assembly, 300
Finishing, 100
Required: Calculate the support department costs allocated to producing departments using:
- Direct distribution method
- Sequential distribution or step-down method
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