Sabre plc produces one product, the Delta. In one standard hour, 6 units of Delta should be made (i.e. one Delta every 10 minutes). Actual production for the period was 360 units. Actual hours worked to achieve this production amounted to 50 hours. The basic rate of pay is £14/hour. A bonus of 50% of the basic rate of pay is earned for every hour of production time saved. What is the labour cost for making 360 units of Delta? a) £840 b) £1,050 c) £770 d) £910
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.
Sabre plc produces one product, the Delta. In one standard hour, 6 units of Delta should be made (i.e. one Delta every 10 minutes). Actual production for the period was 360 units. Actual hours worked to achieve this production amounted to 50 hours. The basic rate of pay is £14/hour. A bonus of 50% of the basic rate of pay is earned for every hour of production time saved.
What is the labour cost for making 360 units of Delta?
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a) £840
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b) £1,050
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c) £770
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d) £910
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