Jam produces siomai (10,000 units is needed per month) and incurred the following: DM is 5 per unit; DL is 5 per unit; and total overhead cost of 30 per unit. The 20% of OH is fixed cost. Handling cost is 10% of DM used. Siomai can be purchased from outsider at 36 per unit. The plant used in making the product X will be vacant when purchased form outsider, but it can be rented out to other companies at 40,000 per month and 2/3 of FOH will be avoided. What is the disadvantage of decision to make?
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.
Jam produces siomai (10,000 units is needed per month) and incurred the following: DM is 5 per unit; DL is 5 per unit; and total
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