The following information provides details of the costs, volume and transaction cost drivers for a period in respect of XYZ Ltd: Overhead costs TZS Sales and production (units) Raw materials usage (units) Direct materials cost (TZS) Direct labour hours Machine hours Direct labour cost (TZS) Number of production runs Number of deliveries Number of receipts Number of production orders 45 Other variable cost data include: Set up Machines Receiving Packing Engineering 75,000 1,000,000 900,000 650,000 Products 750,000 3,375,000 A 90,000 10 30 2.5 5 20 5 18 50 B 30,000 15,000 14 15 7 40 3 3 20 30 10 7 70 C 25 1.5 7.5 10 50 50 700 60 Total 135,000 1,320,000 4,125,000 337,500 652,500 2,850,000 65 75 820 130 Total You are required to (a) Calculate the total costs for each product if all overhead costs are absorbed on a labour our basis; (b) Calculate the total costs for each product, using activity based costing;
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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