Your company assembles five different models of a motor scooter that is sold in specialty stores in the United States. The co uses the same engine for all five models. You have been given the assignment of choosing a supplier for these engines for t year. Due to the size of your warehouse and other administrative restrictions, you must order the engines in lot sizes of 1,050 Because of the unique characteristics of the engine, special tooling is needed during the manufacturing process for which yo to reimburse the supplier. Your assistant has obtained quotes from two reliable engine suppliers and you need to decide whi The following data have been collected Requirements (annual forecast) weight per engine Order processing cost Inventory carry cost 12,600 units 25 pounds 165 per order 20 percent of the average value of inventory per year
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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