Kapur Company manufactures two products: S and K. Manufacturing support costs are estimated to be RM2 million for the current year. Estimated unit cost and production data are as follows: Items Direct material cost Direct labor cost (RM12 per hour) Estimated production units Activity Machine setups Purchase ordering Machine hours a) Required: Estimate the manufacturing cost per unit of each product if support costs are assigned to products on the traditional basis of direct labor hours Assume next that the company's manufacturing support costs can be traced to four activities as follows: Cost driver units demanded by each product Inspection Product S RM30 RM24 25,000 Activity costs RM Cost drivers 400,000 600,000 500,000 500 000 Number of setups Number of orders Number of machine hours Number of Product K RM45 RM60 15,000 Product S 100 200 2,000 200 Product K 400 400 6,000 300
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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