Required: Calculate the selling price of each of the three (3) products
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.
Kukrudu Co. Ltd produces three modules of a product namely Hwentsia (H), Prekese (P) and
Kakaduro (K).
The following data related to the products for the period.
H K P Total
GH¢‘000 GH¢‘000 GH¢‘000 GH¢‘000
Direct Material 150 240 200 590
Direct Labour Cost 14.4 24 54 92.4
Machine settings 26
Overhead Processing 64
Warehouse Cost 93
Energy to run machine 42
Shipping 36
A consultant, Mr. P. S. Initiative recommended the following after a detailed study of the
company’s production process.
ACTIVITY COST DRIVER ACTIVITY LEVEL
H K P
a. Machine setup No. of Production runs 22 34 44
b. Sales order processing No. of sales received 400 600 600
c. Warehouse cost No of units held in inventory 200 200 400
d. Energy Machine Hours 10,000 16,000 24,000
e. Shipping No. of Units shipped 1000 4000 10,000
It is the policy of the Kukrudu Co. Ltd. to make a profit margin of 25% on its products.
Required:
Calculate the selling price of each of the three (3) products
(all calculations should be to the nearest Ghana cedi).
Step by step
Solved in 4 steps with 2 images
