God's Will Ent., GWT, started its business in 2021. The following information was available for January to March 31, 2021 for the company that started to produce a single product: GHC Selling price per unit 200 Direct materials per unit 40 Direct Labour per unit 20 Fixed factory overhead per month 60,000 Page 4 of 10 Variable factory overhead per unit 10 Fixed selling overheads 2000 Variable selling overheads per unit 8 Budgeted activity was expected to be 2,000 units each month Production and sales for each month were as follows: January February March Unit sold 2,000 1,600 2,200 Unit produced 2,000 2,600 1,800 Required: Prepare profit statements based on absorption costing system, for God's Will Ent., GWT, for the three months ending 31/03/2021.
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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