Dover Studios shot hundreds of hours of footage that cost $48,000,000. From this footage, the company produced two movies: Star World and Star World: The Sequel. The sequel used better sound effects than the original, was significantly more expensive to produce, and was much better received at the box office. Dover Studios also generated revenue from admissions paid by numerous movie fans who wanted to tour the movie production set. The company accounted for this revenue as a by-product and used it to reduce joint cost before making allocations to the two feature-length movies. The following information pertains to the two movies: Products Total Receipts Separate Costs Star World $24,000,000 $16,320,000 Star World: The Sequel 139,200,000 98,880,000 Studio tours 1,920,000 1,152,000 a. If joint cost is allocated based on net realizable value, how much of the joint cost is allocated to each movie? Star World 24 Star World: The Sequel Total 2$ b. Based on your allocations in (a), how much profit was generated by each movie? Star World Star World: The Sequel Total
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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