NFL Inc. produces sport’s equipment made to customer’s specifications. The following data pertain to Job 101. 6-month ending June 30, 2016 6-month ending 12/31/2016 Materials – Dept. 1 P100,000 P200,000 Direct Labor rate – Dept. 1 P10/hour P15/hour Labor hours used – Dept. 1 4,000 hours 2,000 hours Direct labor rate – Dept. 2 P20/hour P30 Labor hours used – Dept. 2 1,000 hours 3,000 hours Machine hours used – Dept. 2 2,000 hours 1,000 hours Additional data: a. NFL Inc. determined that the amount of operating expenses is 10% of full production cost of job. b. The company has provided a net profit mark up of 20% based on sales. c. Applied factory overhead: Department 1 P5.00 per direct labor hour Department 2 P2.00 per machine hour What is the net profit if Job 101 was completed and sold in year 2016?
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.
NFL Inc. produces sport’s equipment made to customer’s specifications. The following data pertain to Job
101.
6-month ending June 30, 2016 6-month ending 12/31/2016
Materials – Dept. 1 P100,000 P200,000
Direct Labor rate – Dept. 1 P10/hour P15/hour
Labor hours used – Dept. 1 4,000 hours 2,000 hours
Direct labor rate – Dept. 2 P20/hour P30
Labor hours used – Dept. 2 1,000 hours 3,000 hours
Machine hours used – Dept. 2 2,000 hours 1,000 hours
Additional data:
a. NFL Inc. determined that the amount of operating expenses is 10% of full production cost of job.
b. The company has provided a net profit mark up of 20% based on sales.
c. Applied factory
Department 1 P5.00 per direct labor hour
Department 2 P2.00 per machine hour
What is the net profit if Job 101 was completed and sold in year 2016?
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