Question A proforma cost sheet of a company provides the following particulars: Elements of Cost Raw Materials Direct Labours Overheads Total cost Profit |Selling price Amount in Rs Per unit 140 60 70 270 30 300 Further particulars available are : Raw materials are in stock on average for one month. Materials are in process on an average for half a month. Finished goods are in stock on an average for one month. Credited allowed by suppliers is one month-credited allowed to customers is two months. Lag in payment of wages one and a half weeks.(1 ½ Weeks), Lag in payment of overhead expenses is one month. One fourth of the output is sold against cash. Cash in hand and at bank is expected to be Rs 50,000.
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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