Sarah is in her first year of work at an accounting services firm after earning her degree. She has become very comfortable preparins financial statements for many different companies that use standard costing within their absorption costing systems. However, one client now needs not only its usual absorption costing income statements but also financial statements for the same period present under variable costing. Sarah gathers the following information, noting there are no price or efficiency variances in either year. If there is a fixed-MOH volu variance, company policy is to write it off directly to COGS. Budgeted Information for Both Years Budgeted production Budgeted fixed manufacturing cost Budgeted fixed operating expense Budgeted variable operating expense Budgeted variable manufacturing cost Budgeted selling price Beginning FG Inventory units Actual units produced Sales volume Year 1 60,300 units $361,800 $483,000 $4 $23 $50 Year 2 2,700 56,200. 60,300 53,500 61.400 per unit per unit per unit
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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