South East Corp. produces D-2 toys with the following unit cost: Direct Materials P4.00 Direct labor P6.00 Factory overhead Variable P3.00 Fixed (based on a normal capacity of 10,000 units) P2.00 Beginning inventory 2,000 units Production 8,000 units Units sold (selling price P50) 7,000 units Additional expenses Variable selling and administrative P60,000 Fixed selling and administrative P35,000 How much are the net income under absorption costing and variable costing methods?
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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