St. Kilda Enterprises produces parts for the electronics industry. The production manager and cost analyst reviewed the accounts for the previous month and have provided an estimated breakdown of the fixed and variable portions of manufacturing overhead. Fixed Variable Total Indirect materials $ 5,800 $ 10,800 $ 16,600 Indirect labor 3,400 17,400 20,800 Supervision 11,800 4,400 16,200 Depreciation 38,800 6,800 45,600 Maintenance 18,800 23,800 42,600 Total $ 78,600 $ 63,200 $ 141,800 Direct materials for the month amounted to $111,500. Direct labor for the month was $206,500. During the month, 12,500 units were produced. Required: a. No changes are expected in these cost relations next month. The firm has budgeted production of 16,250 units. Provide an estimate for total production cost for next month. b. Determine the cost per unit of production for the previous month and the next month.
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.
St. Kilda Enterprises produces parts for the electronics industry. The production manager and cost analyst reviewed the accounts for the previous month and have provided an estimated breakdown of the fixed and variable portions of manufacturing
| Fixed | Variable | Total | ||||||||||
| Indirect materials | $ | 5,800 | $ | 10,800 | $ | 16,600 | ||||||
| Indirect labor | 3,400 | 17,400 | 20,800 | |||||||||
| Supervision | 11,800 | 4,400 | 16,200 | |||||||||
| 38,800 | 6,800 | 45,600 | ||||||||||
| Maintenance | 18,800 | 23,800 | 42,600 | |||||||||
| Total | $ | 78,600 | $ | 63,200 | $ | 141,800 | ||||||
Direct materials for the month amounted to $111,500. Direct labor for the month was $206,500. During the month, 12,500 units were produced.
Required:
a. No changes are expected in these cost relations next month. The firm has budgeted production of 16,250 units. Provide an estimate for total production cost for next month.
b. Determine the cost per unit of production for the previous month and the next month.
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