QUESTION 4. Etsi GR is a Greek manufacturing company whose total factory overhead costs fluctuate from year to year according to the number of machine- hours worked in its production facility. These costs at HIGH and LOW levels of activity over recent years are given below: High Low Machine –hours 80,000 60,000 Total overhead costs €312,000 €274,000 The total overhead costs ABOVE AT 60,000 machine hours (Low point) are made up of the following costs: Indirect Materials (VARIABLE) € 90,000 Rent (FIXED) 130,000 Maintenance (MIXED) 54,000 274,000 B)Use the HIGH LOW method, break down the Maintenance costs into b(variable cost per machine hour) and a (total fixed maintenance cost)
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.
QUESTION 4.
Etsi GR is a Greek manufacturing company whose total
These costs at HIGH and LOW levels of activity over recent years are given below:
High Low
Machine –hours 80,000 60,000
Total overhead costs €312,000 €274,000
The total overhead costs ABOVE AT 60,000 machine hours (Low point) are made up of the following costs:
Indirect Materials (VARIABLE) € 90,000
Rent (FIXED) 130,000
Maintenance (MIXED) 54,000
274,000
- B)Use the HIGH LOW method, break down the Maintenance costs into b(variable cost per machine hour) and a (total fixed maintenance cost)
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