WRITERS' Company Writers' Company produces 2 products presently The information related to manufacturing is given below. WRITERS' Company Yr 2018-19 Fountain Pen Units 10000 Area occupied (sq feet) 7000 Variable cost – Direct 32 Fixed Cost - Direct (per unit) 10 Rent - Fixed Cost per month (Indirect - common for all products) Ball point 20000 8000 25 8 3,00,000.00 The Fixed indirect cost of Rent of Rs 3,00,000/- is to be allocated to both the products The company was doing this on the "number of units" basis till now. a. Please compute cost per unit of each product basis the above method. You have researched and advised Writers' Company to have Activity Based Costing and have gathered data to support the allocation of the Fixed indirect cost as follows : Break-up of Indirect Fixed Costs Allocation basis Area of Rent 3,00,000 operations b. Please compute cost per unit of each product on the new method of allocation WRITERS' Company Writers company produces 2 product's presently The information related to manufacturing is given below. WRITERS' Company Units Area occupied (sq feet) Variable cost – Direct Fixed Cost - Direct (per unit) Rent - Fixed Cost per month (Indirect - common for all products) Yr 2018-19 Fountain Pen 10000 7000 32 10 Ball point 20000 8000 25 8 3,00,000.00
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.
WRITERS' Company
Writers' Company produces 2 products presently The information related to manufacturing is given below.
WRITERS' Company Yr 2018-19
Fountain Pen
Units 10000
Area occupied (sq feet) 7000
Variable cost – Direct 32 Fixed Cost - Direct (per
unit) 10
Rent - Fixed Cost per month (Indirect - common for all products)
Ball point
20000 8000 25
8
3,00,000.00
The Fixed indirect cost of Rent of Rs 3,00,000/- is to be allocated to both the products The company was doing this on the "number of units" basis till now.
a. Please compute cost per unit of each product basis the above method.
You have researched and advised Writers' Company to have Activity Based Costing and have gathered data to support the allocation of the Fixed indirect cost as follows :
Break-up of Indirect Fixed Costs Allocation basis
Area of Rent 3,00,000 operations
b. Please compute cost per unit of each product on the new method of allocation
WRITERS' Company
Writers company produces 2 product's presently
The information related to manufacturing is given below.
WRITERS' Company
Units
Area occupied (sq feet) Variable cost – Direct
Fixed Cost - Direct (per unit)
Rent - Fixed Cost per month (Indirect - common for all products)
Yr 2018-19
Fountain Pen
10000 7000 32 10
Ball point
20000 8000 25 8
3,00,000.00
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