Direct labor hours (professionals) Direct labor costs (professionals) Support staff salaries Computer leases Office supplies Office rent 7,500 hours $ 1,500,000 464,000 45,000 29,000 62,000 Delightful Tieats Melva Chocolates Direct labor hours 500 hours 400 hours Software licensing costs Travel costs $ 3,500 5,000 $ 200
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.
Using job order costing in a service company
Bluebird Design, Inc. is a Web site design and consulting firm. The firm uses a job order costing system in which each client is a different job. Bluebird Design assigns direct labor, licensing costs, and travel costs directly to each job. It allocates indirect
At the beginning of 2018, managing partner Sally Simone prepared the following budget estimates:
In November 2018, Bluebird Design served several clients. Records for two clients appear here:
Requirements
- Compute Bluebird Designs direct labor rate and its predetermined overhead allocation rate for 2018.
- Compute the total cost of each job.
- If Simone wants to earn profits equal to 50% of service revenue, what fee should she charge each of these two clients?
- Why does Bluebird Design assign costs to jobs?
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