Direct labor $ 9,000 Direct materials 1,000 2,000 Overhead Total $12,000
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.
A local barbershop cuts the hair of 1,200 customers per month. The clients are men, and the bar-
bers offer no special styling. During the month of May, 1,200 customers were serviced. The cost of haircuts includes the following:
Required:
1. Explain why process costing is appropriate for this haircutting operation.
2. Calculate the cost per haircut.
3. Can you identify some possible direct materials used for this haircutting service? Is the usage
of direct materials typical of services? If so, provide examples of services that use direct
materials. Can you think of some services that would not use direct materials?
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
