Simms Realtors, a real state consulting firm, specializes in advising companies on potential new plant sites. The company uses a job order costing system with a predetermined indirect cost allocation rate, computed as a percentage of direct labor costs. At the beginning of 2011, managing partner Debra Simms prepared the following budget for the year: Direct labor hours (professional) 14,000 hours Direct labor costs (professional) $2,150,000 Office rent 260,000 Support staff sallaries 850,000 Utilities 350,000 Maynard Manufacturing, Inc. is inviting several consultants to bid for work. Debra Simms estimated that this Job will require about 260 direct labor hours.
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.
Simms Realtors, a real state consulting firm, specializes in advising companies on potential new plant sites. The company uses a
Direct labor hours (professional) 14,000 hours
Direct labor costs (professional) $2,150,000
Office rent 260,000
Support staff sallaries 850,000
Utilities 350,000
Maynard Manufacturing, Inc. is inviting several consultants to bid for work. Debra Simms estimated that this Job will require about 260 direct labor hours.
Compute Simms' Relators' indirect cost allocation rate.
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