Following is the information about cost system of K and A Ltd. For the year ended 31 October 1998. Estimate of revenue and costs for 10 000 units. $Revenue300 000Costs: Direct materials (10 000 kilos) 60 000 Direct labour (at $11 per hour)132 000 Fixed overheads 70 000 Actual revenue and costs for 18 000 units $Revenue 504 000Costs: Direct materials (17 560 kilos) 119 408Direct labour (23 000 hours) 233 450Fixed overheads 70 000 Required; (a)Calculate the following variances also state whether are favourable or un - Favourable.(i)quantity (the difference between the profits expected on 10 000 units and the profit which would be expected on 18 000 units); (ii)sales price; (iii)direct material usage and price; (iv)Direct labour efficiency and rate. (b)Prepare a financial statement reconciling the expected profit to the actual profit showing the variances calculated in (a).
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.
Step by step
Solved in 6 steps with 8 images
