Towards the end of the month of August, Dolphin Pty Ltd had only one job, A1, with te following costs accumulated: Job A1 Direct material cost $75,000 Direct labour costs $275,000 Total $350,000
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.
Towards the end of the month of August, Dolphin Pty Ltd had only one job, A1,
with te following costs accumulated:
|
|
Job A1 |
|
Direct material cost |
$75,000 |
|
Direct labour costs |
$275,000 |
|
Total |
$350,000 |
Additional information:
Dolphin Ltd uses normal costing to account for its jobs.
Direct labour is paid at the rate of $25 per direct labour-hour (DLH).
Only Job A1 (units produced= 1,600 pipes) was completed at the end of August.
Required:
|
1. |
Calculate the total cost of the job and unit cost per pipe. |
(3 marks) |
|
|
|
|
|
2. |
What are two advantages of using normal costing? |
(2 marks) |
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