Pratt Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor- hours and its standard cost card per unit is as follows: Direct materials: 5 pounds at $4 per pound 2$4 20.00 Direct labor: 2 hours at $7.50 per hour 15.00 Variable overhead: 2 hours at $6 per hour 12.00 Total standard cost per unit $4 47.00 During March the company produced and sold 3,500 units and incurred the following costs: Purchased 17,000 pounds of raw materials at a cost of $3.50 per pound. All of this material was used in production. Direct laborers worked 7,200 hours at a rate of $8 per hour. Total variable manufacturing overhead for the month was $40,500.
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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