Q-5. A company manufactures three products A, B, and C using the same equipment and processes. Data for the period is given below. C B A 20000 25000 2000 Production (units) $20 $20 $20 Sales price (per unit) $5 S10 $10 Material cost per unit hour Labour hours per unit hours hour Labour is paid at the rate of S5 per hour Overheads for the period were as follows: 90000 Set up costs 30000 Receiving 15000 Dispatch Machining 55000 $190000 Cost driver data: B Machine hours per unit 10 13 2 Number of set ups Number of deliveries received 2 20 20 20 Number of orders dispatched Required: 1.Calculate the cost per unit, absorbing all the overheads on the basis of labour hours. (5) 2. Calculate the cost per unit, absorbing the overheads on the basis of Activity based costing approach. (5)
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 4 steps with 4 images
