Giant Ltd manufactures three different types of products: X, Y and Z. It was expected that the production and demand for the next year on these products as follows: Product X Product Y Product Z Units 1500 2250 3000 Additional details about the products are also as follows: Each unit Product X Product Y Product Z £ £ £ Selling price 174 340 310 Materials 32 80 60 Labour 40 96 80 Variable overheads 24 60 48 Giant Ltd pays labour £8 an hour and expects its fixed overheads to be £240,000. please a) Calculate the production plan that will maximise profit for Giant Ltd for next year given that Giant Ltd has only managed to contract 45,000 labour hours for next year. b) Calculate Giant’s profit based on the production plan 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.
Giant Ltd manufactures three different types of products: X, Y and Z. It was expected that the production and demand for the next year on these products as follows:
Product X Product Y Product Z
Units 1500 2250 3000
Additional details about the products are also as follows:
Each unit Product X Product Y Product Z
£ £ £
Selling price 174 340 310
Materials 32 80 60
Labour 40 96 80
Variable
Giant Ltd pays labour £8 an hour and expects its fixed overheads to be £240,000.
please
- a) Calculate the production plan that will maximise profit for Giant Ltd for next year given that Giant Ltd has only managed to contract 45,000 labour hours for next year.
- b) Calculate Giant’s profit based on the production plan in A.
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