Q5. The capacity usage ratio and the capacity utilisation ratio in respect of a machine for a particular month is 80% and 90% respectively. The total available working-hours in a month are 200 hours. The break-up of idle time is as follows: Waiting for job 5 hours Breakdown 4 hours Waiting for tools 3 hours Calculate the idle time cost and present the same in a tabular form when the hourly fixed cost of running the machine is $. 8.00.
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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