Guess Apparel completed 3,600 expensive bags during the 1st quarter of the current year. The following costs per unit are presented below: Direct materials P200 Direct labor 180 Factory overhead, including P10 allowance for spoilage180 Final inspection revealed that 600 bags were spoiled which were sold as export overrun at an amount equal to 40% of production costs. The good units were delivered and billed the customer at 20% gross profit.
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.
Guess Apparel completed 3,600 expensive bags during the 1st quarter of the current year. The following costs per unit are presented below:
Direct materials P200
Direct labor 180
Factory
Final inspection revealed that 600 bags were spoiled which were sold as export overrun at an amount equal to 40% of production costs. The good units were delivered and billed the
customer at 20% gross profit.
1. If the spoilage is common to all jobs, the amount billed to the customer is
_____________
2. If spoilage is due to customer’s intervention, how much is the gross profit on the
order? _______________
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