Plato Company is to submit a bid on the production of 22,500 ceramic plates. It is estimated that the cost of materials will be P26,000 and the cost of direct labor will be P30,000. Factory overhead is applied at P2.70 per direct labor hour in the Molding Department and at 35% of the direct labor cost in the Decorating Department. It is estimated that 2,000 direct labor hours, at a cost of P18,000 will be required in the Molding Department. The company wants a markup of 45% of its total production cost. How much will the company bid for the ceramic plates?
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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