Modern Tools makes two types of chain saws-High Grade and Professional. Data concerning these two product lines appear below: Selling price per unit Direct materials per unit Direct labour per unit Direct labour-hours per unit Estimated annual production and sales Estimated total manufacturing overhead Estimated total direct labour-hours Product margin High Grade $215.50 $83.50 $ 30.00 . 1.0 DLHs 75,000 units. The company has a traditional costing system in which manufacturing overhead is applied to units based on direct labour-hours. Data concerning manufacturing overhead and direct labour-hours for the upcoming year appear below: High Grade Professional Required: 1. Compute the product margins for the High Grade and the Professional products under the company's traditional costing system. Professional $387.00 $212.00 $ 45.00 1.5 DLHS 25,000 units. $1,350,000 112,500 DLHS $ Total
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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