Product Cost Period (Selling Name of the Cost Variable Cost Fixed Cost Direct Materials Direct Labor Manu-facturing Overhead and Admin) Cost Oppor-tunity Cost Sunk Cost Rental revenue forgone, $30,000 per year X Direct materials cost, $80 per unit X X Rental cost of warehouse, $500 per month X X Rental cost of equipment, $4,000 per month X X Direct labor cost, $60 per unit X X Depreciation of the annex space, $8,000 per year X X X Advertising cost, $50,000 per year X X Supervisor's salary, $1,500 per month X X Electricity for machines, $1.20 per unit X X Shipping cost, $9 per unit X X Return earned on investments, $3,000 per year X
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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Product Cost |
Period (Selling |
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Name of the Cost |
Variable Cost |
Fixed Cost |
Direct Materials |
Direct Labor |
Manu-facturing |
and Admin) Cost |
Oppor-tunity Cost |
Sunk Cost |
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Rental revenue forgone, $30,000 per year |
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X |
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Direct materials cost, $80 per unit |
X |
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X |
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Rental cost of warehouse, $500 per month |
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X |
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X |
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Rental cost of equipment, $4,000 per month |
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X |
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X |
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Direct labor cost, $60 per unit |
X |
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X |
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X |
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X |
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X |
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Advertising cost, $50,000 per year |
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X |
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X |
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Supervisor's salary, $1,500 per month |
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X |
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X |
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Electricity for machines, $1.20 per unit |
X |
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X |
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Shipping cost, $9 per unit |
X |
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X |
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X |
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