PROBLEM 54. A certain cost centre consists of ten workers using similar machines. The normal week consists of 5 days totalling 42 hours. Each worker has two weeks' annual holidays, together with other holidays of 5 days per annum. Each week two hours per operator should be spent in cleaning etc.. and it is estimated that illness and absenteeism will cause the loss of 1,100 hours per annum. It is not anticipated that any overtime will be worked, or that any other time than that stated will be lost. Overheads allocated and apportioned to the cost centre, which are to be absorbed at a rate per direct labour hour, total $ 13,875, and you are required to calculate the absorption rate. During the year, actual overheads amounted to $. 14,500; time occupied in cleaning etc., totalled 1,000 hours, time lost by illness and absenteeism totalled 1,300 hours; time lost by machine break down totalled 200 hours. Overtime worked on production during the period amounted to 800 hours. Present the overhead absorption account at the year-end assuming that standard costing is not in operation.
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.
Step by step
Solved in 2 steps with 2 images
