X plc makes one product, which passes through a single process. Details of the process are as follows: Materials: 5,000 kg at 50p per kg Labour: £800 Production overheads 200% of labour Normal losses are 20 per cent of input in the process, and without further processing any losses can be sold as scrap for 30p per kg. The output for the period was 3,800 kg from the process. There was no work-in-progress at the beginning or end of the period.
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.
X plc makes one product, which passes through a single process.
Details of the process are as follows:
Materials: 5,000 kg at 50p per kg
Labour: £800
Production
Normal losses are 20 per cent of input in the process, and without further processing any
losses can be sold as scrap for 30p per kg.
The output for the period was 3,800 kg from the process.
There was no work-in-progress at the beginning or end of the period.
What is the value of the abnormal loss?
(A) £60
(B) £196
(C) £230
(D) £245
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