Hisense Ltd is planning to sell 2,200 and produce 2,000 wicker baskets during June. Each unit requires 120 linear feet of wicker and 0.70 hours of direct labour. Wicker costs GH¢0.35 per linear foot and employees of the company are paid GH¢13.00 per hour. Manufacturing overhead is applied at a rate of 140% of direct labour costs. The company wants to have 10% of the wicker needed for the next month’s production available at the end of each month. The expected production in July is 1,800 baskets. What is the total amount that will be budgeted for direct labour for June?
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.
Hisense Ltd is planning to sell 2,200 and produce 2,000 wicker baskets during June. Each unit requires 120 linear feet of wicker and 0.70 hours of direct labour. Wicker costs GH¢0.35 per linear foot and employees of the company are paid GH¢13.00 per hour. Manufacturing overhead is applied at a rate of 140% of direct labour costs. The company wants to have 10% of the wicker needed for the next month’s production available at the end of each month. The expected production in July is 1,800 baskets. What is the total amount that will be budgeted for direct labour for June?
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