Q-1: The Hum co. has decided to distribute the costs of service departments by the algebraic method. The producing department A and B the service departments X and Y and the monthly data are: Actual factory overhead Cost before distribution Rs Service provided by Y 84,000 58,000 20,000 17,600 40% 50% В 50 30 20 Y. 10 Required: Total factory overhead of producing department after distribution of service department cost. Department A predetermined overhead rate is based on direct labor hours. The total rate is Rs3, 40% of which fixed. Fixed overhead budgeted is Rs 46,000. The Actual direct labor hours for the month were 34,000. Compute spending and idle capacity variances for department A.
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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