Exercise # 3 Velvet Ltd provides legal services and has firms across the Asia-Pacific. It adopts a job costing system, where direct costs are charged to individual clients and indirect costs are charged to jobs using a predetermined overhead rate. Velvet Ltd uses direct cost as the allocation base. Igor, Velvet Ltd's management accountant, anticipates the following costs for th+pcoming year. Cost 3,200,000 370,000 630,000 310,000 120,000 310,000 200,000 Suppose the direct costs incurred for Job 2016 is $58,000. Professional staff salary Administrative staff salary Rent and insurance expenses Utilities expenses Law Society membership Travel expenses Other costs Required: Calculate the total cost of Job 2016, Percentage of direct costs 95% 60% 0% 0% 0% 92% 36%
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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