The following cost allocation information is available for Moving Motors Ltd: Production departments Service departments A B Stores Maintenance Total Allocated costs R105 000 R196 500 R37 800 R50 700 R390 000 Service department usage - Stores 50% 40% - 10% - Maintenance 60% 15% 25% - If Moving Motors Ltd uses the simultaneous equation method of allocation, and Production Department A’s overhead recovery rate is R4.15 per machine hour, then the budgeted machine hours for Production Department A are (rounded): a. 43 003 machine hours b. 39 518 machine hours c. 40 000 machine hours d. 39 617 machine hours e. 43 080 machine 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.
The following cost allocation information is available for Moving Motors Ltd:
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|
Production departments |
Service departments |
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|
A |
B |
Stores |
Maintenance |
Total |
|
Allocated costs |
R105 000 |
R196 500 |
R37 800 |
R50 700 |
R390 000 |
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|
|
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Service department usage |
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|
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|
|
- Stores |
50% |
40% |
- |
10% |
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|
- Maintenance |
60% |
15% |
25% |
- |
|
If Moving Motors Ltd uses the simultaneous equation method of allocation, and Production Department A’s overhead recovery rate is R4.15 per machine hour, then the budgeted machine hours for Production Department A are (rounded):
43 003 machine hours
39 518 machine hours
40 000 machine hours
39 617 machine hours
43 080 machine hours
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