Hardwick Hardwick makes a product, the Trestle, which has the following standard cost per item: £ Materials 5 kg at £3 per kg 15 Labour 4 hours at £10 per hour 40 Variable overhead 4 hours at £5 per hour 20 Fixed overhead 25 100 Profit 40 Selling price 140
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.
Hardwick
Hardwick makes a product, the Trestle, which has the following
|
|
|
£ |
|
Materials |
5 kg at £3 per kg |
15 |
|
Labour |
4 hours at £10 per hour |
40 |
|
Variable overhead |
4 hours at £5 per hour |
20 |
|
Fixed overhead |
|
25 |
|
|
|
100 |
|
Profit |
|
40 |
|
Selling price |
|
140 |
Budgeted production and sales were 8,000 Trestles; there was no opening inventory.
Actual results were as follows:
8,200 Trestles were produced and 7,900 were sold for a total of £1,150,000
42,000 kg of material were purchased and used at a cost of £120,000
31,500 hours were worked and cost £330,750
Variable
Fixed overheads were £210,000
Produce an operating statement for the period which reconciles the budgeted and actual profit under an absorption costing system.
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