The Randolph Company uses activity – based costing and provides this information: Manufacturing Activity Area Cost driver used as Application base Conversion cost per unit of base Materials handling Number of parts P 0.45 Machinery Machine – hours 51.00 Assembly Number of parts 2.85 inspection Number of finished units 30.00 Assume that 75 units of a component for packaging machines have been manufactured. Each unit required 105 parts and 3 machine – hours. Direct materials cost P600 per finished unit. All other manufacturing costs are classified into one category, conversion costs. The total manufacturing costs is?
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 Randolph Company uses activity – based costing and provides this information:
|
Manufacturing Activity Area |
Cost driver used as Application base |
Conversion cost per unit of base |
|
Materials handling |
Number of parts |
P 0.45 |
|
Machinery |
Machine – hours |
51.00 |
|
Assembly |
Number of parts |
2.85 |
|
inspection |
Number of finished units |
30.00 |
Assume that 75 units of a component for packaging machines have been manufactured. Each unit required 105 parts and 3 machine – hours. Direct materials cost P600 per finished unit. All other
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