ZABZUGU TATALE produces a specialized product KANZO. The product passes through three (3) cost centers namely: machining, assembly and painting shop. Data relating to the cost centers is as below: Machining Assembly Painting shop Engineering shop stores Number of employees 81 51 39 30 24 Engineering shop - service 18,000 12,000 10,000 - - Stores (orders) 180 135 90 45 - At a management meeting dated 24th September 20X0, the following overheads were budgeted for the production and service cost centers exclusively for the ensuing period: Cost centers GHS 000 Machining 180,000 Assembly 160,000 Painting shop 130,000 Engineering shop 84,000 Stores 52,000 Canteen 75,000 Equally, the following budgeted data relates to the production cost centers: Machining Assembly Painting shop Machine hours 9,200 8,100 6,600 Labour hours 8,300 11,250 9,000 Labour cost (GHS) 40,000 88,000 45,000 Actual results for the production cost centers were: Machining Assembly Painting shop Machine hours 10,000 8,200 6,600 Labour hours 4,500 7,800 6,900 Labour cost (GHS) 25,000 42,000 35,000 Actual overheads (GHS) 290,000 167,000 155,000 Required: a. Apportion the production overhead costs of the service cost centers to the production cost centers and determine predetermined overhead absorption rates for the three (3) production cost centers on the following basis: Machining - Machine hours. Assembly - Labor hours. Paint shop - labour cost b. Prepare a statement showing the under/over absorption per cost center for 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.
ZABZUGU TATALE produces a specialized product KANZO. The product passes through three (3) cost centers namely: machining, assembly and painting shop. Data relating to the cost centers
is as below:
| Machining | Assembly | Painting shop | Engineering shop | stores | ||
| Number of employees | 81 | 51 | 39 | 30 | 24 | |
| Engineering shop - service | 18,000 | 12,000 | 10,000 | - | - | |
| Stores (orders) | 180 | 135 | 90 | 45 | - |
At a management meeting dated 24th September 20X0, the following
| Cost centers | GHS 000 |
| Machining | 180,000 |
| Assembly | 160,000 |
| Painting shop | 130,000 |
| Engineering shop | 84,000 |
| Stores | 52,000 |
| Canteen | 75,000 |
Equally, the following budgeted data relates to the production cost centers:
| Machining | Assembly | Painting shop | |
| Machine hours | 9,200 | 8,100 | 6,600 |
| Labour hours | 8,300 | 11,250 | 9,000 |
| Labour cost (GHS) | 40,000 | 88,000 | 45,000 |
Actual results for the production cost centers were:
| Machining | Assembly | Painting shop | |
| Machine hours | 10,000 | 8,200 | 6,600 |
| Labour hours | 4,500 | 7,800 | 6,900 |
| Labour cost (GHS) | 25,000 | 42,000 | 35,000 |
| Actual overheads (GHS) | 290,000 | 167,000 | 155,000 |
Required:
a. Apportion the production overhead costs of the service cost centers to the production
cost centers and determine predetermined overhead absorption rates for the three (3)
production cost centers on the following basis:
Machining - Machine hours.
Assembly - Labor hours.
Paint shop - labour cost
b. Prepare a statement showing the under/over absorption per cost center for the period
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