X Company manufactures a single product. Monthly production costs incurred in the manufacturing process are shown below for the production of 500 units and 1,000 units. Assume that $1,000 of the factory maintenance cost was fixed cost. COSTS 500 units 1,000 units Depreciation of plant equipment $6,000 $6,000 Direct labor 2,500 5,000 Direct material 5,000 10,000 Factory maintenance 2,500 4,000 Indirect labor 1,000 2,000 Plant manager salaries 20,000 20,000 Property taxes on plant 6,500 6,500 Based on the above, when the company produces 500 units, total variable costs will be calculated as follows: * 2,500 + 5,000 + 1,000 2,500 + 5,000 + 1,000 + 1,500 2,500 + 5,000 + 1,000 + 1,000 None of the above
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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