Part 1 The total costs and output volume of Example Ltd for the preceding six months are given in the following table: Month Output volume Total costs October 85,000 685,000 November 80,000 700,000 December 75,000 715,000 January 65,000 655,000 February 55,000 640,000 March 75,000 730,000 Required: Use the high-low method to express the cost function for the total monthly costs. The output volume expected to be produced in April is 60,000 units. Estimate the total cost in April. Explain whether you will use this cost function to predict the total costs for 82,000 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.
Part 1
The total costs and output volume of Example Ltd for the preceding six months are given in the following table:
|
Month |
Output volume |
Total costs |
|
October |
85,000 |
685,000 |
|
November |
80,000 |
700,000 |
|
December |
75,000 |
715,000 |
|
January |
65,000 |
655,000 |
|
February |
55,000 |
640,000 |
|
March |
75,000 |
730,000 |
Required:
- Use the high-low method to express the cost function for the total monthly costs.
- The output volume expected to be produced in April is 60,000 units. Estimate the total cost in April.
- Explain whether you will use this cost function to predict the total costs for 82,000 units.
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