You are the cost accountant of an engineering concern which has three departments – preparation, machining and assembly. The budgeted direct labour hours for the workshops are 8,000, 12,000 and 10,000 respectively. Fixed factory overheads are budgeted at $12,000 for the year and variable factory overheads are as follows: Preparation $4,000 Machine shop 30,000 Assembly 20,000 The agreed hourly wage rates are: Preparation $3.60 Machine shop 4.20 Assembly 1.50 The company wishes to quote for job #255 Raw materials $4,160 Direct labour: Preparation 100 hours Machine shop 500 hours Assembly 400 hours Painting by outside contractor $800 Distribution quote from haulage company $280 a) Administration and selling overheads are to be absorbed in job costs at 5% of the total of all other costs. b) Fixed overheads are absorbed on the basis of plant-wide average. Required: Calculate the total cost and quotation price of job #255 where a markup of 25% on cost is applied.
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.
You are the cost accountant of an engineering concern which has
three departments – preparation, machining and assembly.
The budgeted direct labour hours for the workshops are 8,000, 12,000 and
10,000 respectively. Fixed factory
for the year and variable factory overheads are as follows:
Preparation $4,000
Machine shop 30,000
Assembly 20,000
The agreed hourly wage rates are:
Preparation $3.60
Machine shop 4.20
Assembly 1.50
The company wishes to quote for job #255
Raw materials $4,160
Direct labour: Preparation 100 hours
Machine shop 500 hours
Assembly 400 hours
Painting by outside contractor $800
Distribution quote from haulage company $280
a) Administration and selling overheads are to be absorbed in
costs
b) Fixed overheads are absorbed on the basis of plant-wide average.
Required:
Calculate the total cost and quotation price of job #255 where a markup
of 25% on cost is applied.
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