Required: Compute the unit product cost under absorption costing. Compute the unit product cost under variable costing.
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.
Required:
- Compute the unit product cost under absorption costing.
-
Compute the unit product cost under variable costing.
![Everlasting Co. has the following data pertaining to its 1st quarter
of operations:
Activity level - units
Production
Sales
January February
10,000
10,000
March
10,000
7,000
10,000
11,000
Cots incurred in the different areas of operation were as follows:
Per
Per
unit
P 20
15
12
month
Direct Materials
Direct Labor
Variable factory
overhead
Fixed factory overhead
Variable selling and
administrative
Fixed selling and
administrative
P60,000
5
30,000
Fixed factory overhead costs per month are based on the
company's normal capacity of 10,000 units. The company sells
the product at P75 per unit.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1d88f019-5ce0-48d9-bc8f-a92331efd0eb%2Fdf6c141c-104f-416d-aa5b-0d5ba34c9903%2F04ke4a_processed.png&w=3840&q=75)
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