Khalid LLC Trading Company has produced 12,500 units which is 25% capacity level in the factory. The company has used raw material to make the production worth of RO 33 per unit. The company has incurred direct labour cost at RO 31per unit along with direct expenses RO 29 per unit. The company spent RO 122,500 on fixed expenses in the factory with per unit cost of RO 9.8. Other factor expenses for the total production of 12,500 units has arrived at RO 13 per unit. Administration expenses were incurred RO 14 per unit out of which fixed expenses belongs to 40%. Company has appointed a salesman for selling the products produced in the company at RO 15 per unit produced out of which 25% belongs to fixed. The company has also incurred distribution expenses of RO 16 per unit out of which 30% are variable. Requirements: The company has approached the you and ask to prepare the flexible budgets for two more required capacity levels; - 15,000 units. 17,000 units
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.
Khalid LLC Trading Company has produced 12,500 units which is 25% capacity level in the factory. The company has used raw material to make the production worth of RO 33 per unit. The company has incurred direct labour cost at RO 31per unit along with direct expenses RO 29 per unit. The company spent RO 122,500 on fixed expenses in the factory with per unit cost of RO 9.8. Other factor expenses for the total production of 12,500 units has arrived at RO 13 per unit. Administration expenses were incurred RO 14 per unit out of which fixed expenses belongs to 40%. Company has appointed a salesman for selling the products produced in the company at RO 15 per unit produced out of which 25% belongs to fixed. The company has also incurred distribution expenses of RO 16 per unit out of which 30% are variable.
Requirements: The company has approached the you and ask to prepare the flexible budgets for two more required capacity levels; -
- 15,000 units.
17,000 units.
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