In a factory with four production departments and two service departments, theoperating costs for the month of October were as shown below. Production Department 1 Production Department 2 Production Department 3 Service departments Canteen Boiler house R 700,000 300,000 400,000 78,000 100,000 1,578,000 The costs of running the canteen are apportioned to each department on the basis ofthe estimated us of the canteen by employees in each department. Production Department 1 Production Department 2 Production Department 3 Service departments Canteen Boiler house The costs of the boiler house are apportioned on the basis of the estimated consumption of power by each department. The service departments' costs are therefore apportioned as follows: Canteen % 40 20 30 Boiler house % 30 30 20 20 Required: Prepare a statement showing the allocation of costs to the production departments.
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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