What is the prime 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.
What is the prime cost?
![The following data summarizes in part the results of operations for 2021 of
Place Company. Of the total cost of goods manufactured for 2021, 38% was for
materials used, 30% for direct labor, and 32% for manufacturing overhead.
During 2021, the company paid 90% of the materials purchased, leaving
P293,000 of unpaid invoices for materials at year end.
The company commenced 2021 operations with materials inventory of
P421,000. All materials were purchased FOB company's plant. The company
disbursed P2,101,500 for direct labor during 2021. As of December 31, 2021, the
accrued liability for direct labor amounted to P144,000, which was twice as
much as last year's accrual. The inventory of finished goods on December 31,
2021, was 10% of the cost of the units finished during the year, and goods in
process on that date were one-half the finished goods inventory. This year's
finished goods inventory was 150% of last year. There are no in process last
year. The manufacturing overhead, except for depreciation of factory buildings
and equipment, is detailed below:
Indirect labor - P672,000
Heat, light and power - 226,200
Maintenance and repairs - 448,300
Insurance - factory - 18,100
Property taxes - 64,400
Factory payroll taxes - 97,000
Miscellaneous factory costs - 276,400](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7ce39a52-141e-4bca-9fe3-fd3c629680e1%2Fb3ce4d37-2040-4d73-b6bf-6e8e51e6eec4%2Fv9t6mjb_processed.png&w=3840&q=75)
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