units. This production level was achieved, and 21,000 units were sold. Direct material used................. _000. Direct labor incurred Fixed manufacturing Overhead.......... 420,000 Variable manufacturing Overhead.................... Fixed selling and administrative expenses ...... 350,000 ..$600 300,000 Finished-goods inventory, January 1 ...2,000 units 200,000 Wariable selling and administrative expenses .... 105,000 The cost per unit remained the same in the current year as in the previous year. There were no work-in-process inventories at the beginning or end of the year. 1. What would Easton Pump Company's finished-goods inventory cost on December 31 under the variable-costing method? 2. Which costing method, absorption, or variable costing, would show a higher operating income for the year? By what amount?
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.
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