Town and Country Auto Repair uses time and material pricing. The Body Shop has the following cost data. Labour rate per hour including fringe benefits $ 18.00 Annual labour hours $ 10 000 Annual overhead costs: Material handling and storage $ 15 000 Other overhead costs $ 75 000 Annual cost of materials used $ 187 500 Hourly charge to cover profit margin $ 9.50 If a particular job takes 10 hours in labor and $500 in materials, determine the price charged for the job. A. $775 B. $850 C. $390 D. $890
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.
Town and Country Auto Repair uses time and material pricing. The Body Shop has the following cost data.
|
Labour rate per hour including |
$ 18.00 |
|
Annual labour hours |
$ 10 000 |
|
Annual |
|
|
Material handling and storage |
$ 15 000 |
|
Other overhead costs |
$ 75 000 |
|
Annual cost of materials used |
$ 187 500 |
|
Hourly charge to cover profit margin |
$ 9.50 |
If a particular job takes 10 hours in labor and $500 in materials, determine the price charged for the job.
A. $775 B. $850 C. $390 D. $890
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