PQR Company produces two items that go through two departments, production and packing. Details are as below: Product A Product B Material cost per unit Rs 2 Rs 3 Rs 1 Direct Labour cost per unit Actual Units produced Rs 1.5 50 million 10 million Actual machine hours used 4,000 500 Direct Labour hours 800 100 Data for production and packing department is as follows: Production Department Production Department Expected Manufacturing OH Rs 50,000,000 Rs 25,000,000 Cost Driver Machine Hours Labour Hours Budgeted Cost Driver 5,000 machine hours 1,000 labour hours Calculate total per unit cost of Product A and Product B as well as over and under absorption if Actual Overhead at the end of the period were Rs 65 million.
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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