Total production costs for the wheelbarrow department of Greene Garden Products over a year are in the table below. Month Units Produced Production cost Jan 2,000 100,000 Feb 3,400 139,400 Mar 1,600 78,400 Apr 3,200 150,400 May 2,900 145,000 Jun 2,800 117,600 Jul 1,800 86,400 Aug 3,000 150,000 Sep 2,700 118,800 Oct 3,500 161,000 Nov 2,900 121,800 Dec 2,300 108,100 Required: ( a ) Use high-low analysis and other given information to derive a formula to estimate production costs. ( b ) Next month, the company expects to produce 2,000 barrows. Estimate the production cost.
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.
Total production costs for the wheelbarrow department of Greene Garden Products over a year are in the table below.
|
Month |
Units Produced |
Production cost |
|
Jan |
2,000 |
100,000 |
|
Feb |
3,400 |
139,400 |
|
Mar |
1,600 |
78,400 |
|
Apr |
3,200 |
150,400 |
|
May |
2,900 |
145,000 |
|
Jun |
2,800 |
117,600 |
|
Jul |
1,800 |
86,400 |
|
Aug |
3,000 |
150,000 |
|
Sep |
2,700 |
118,800 |
|
Oct |
3,500 |
161,000 |
|
Nov |
2,900 |
121,800 |
|
Dec |
2,300 |
108,100 |
Required:
( a ) Use high-low analysis and other given information to derive a formula to estimate production costs.
( b ) Next month, the company expects to produce 2,000 barrows. Estimate the production cost.
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