total costs
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.
Scaffolder Ltd. is a manufacturing company making construction items. The production process is divided into two production departments, Assembly and Finishing. There is one service department, the Stores department, which is used by both the Assembly and the Finishing departments. The relevant information for the year ahead is as follows:
Indirect Costs for All Three Departments in Total:
|
Item |
Total £ |
|
Maintenance |
40,000 |
|
Rent |
80,000 |
|
|
500,000 |
|
TOTAL |
620,000 |
The following information is available about each department:
|
Item |
Assembly (£) |
Finishing (£) |
Stores (£) |
|
Floor Space (sq meters) |
40,000 |
45,000 |
15,000 |
|
Value of machinery (£) |
160,000 |
20,000 |
20,000 |
|
Maintenance hours |
3,000 |
2,000 |
|
|
Stores requisitions |
2,000 |
3,000 |
|
After allocating the indirect costs to the Assembly, Finishing and Stores departments using a suitable method for each department and reallocating the service department costs over production departments, which are the total costs for each department?
Total costs for the assembly department equal to £620,000, for the finishing department equal to £480,800 and for the Stores Department equal to £0.
Total costs for the assembly department equal to £480,800, for the finishing department equal to £139,200 and for the Stores Department equal to £0.
Total costs for the assembly department equal to £456,000, for the finishing department equal to £102,000 and for the Stores Department equal to £62,000.
None of the answers is correct
Total costs for the assembly department equal to £56,000, for the finishing department equal to £52,000 and for the Stores Department equal to £12,000.
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