What would be Casiu’s operating income for 2021 under absorption costing method?
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.
Casiu Company began its operations on January 1, 2021, and produces a single product that sells for P10.00 per unit. Casiu uses an actual (historical) cost system. In 2021, 100,000 units were produced and 80,000 units were sold. There was no work-in-process inventory at December 31, 2021. Manufacturing costs and selling and administrative expenses for 2021 were as follows:
|
|
Fixed cost |
Variable cost |
|
Raw materials |
- |
P2.00 per unit |
|
Direct labor |
- |
P1.25 per unit |
|
Factory |
P120,000 |
P0.75 per unit |
|
Selling & administrative |
70,000 |
P1.00 per unit |
What would be Casiu’s operating income for 2021 under absorption costing method?
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