A company can sell any mix of Product A and Product B at full capacity. The company has 100,000 hours of capacity. The demand for each product exceeds the capacity (It can sell any product it produces). It takes one hour to make one unit of Product A and two hours to make one unit of Product B. The information given below is available. If capacity is the limiting factor, ?which product should be produced Product A 100,000 a $20 Product B Units produced from capacity available Contribution margin per unit 50,000 $30 100,000 units of Product A and 0 units of Product B 20,000 units of Product A and 30,000 units of Product B () 30,000 units of Product A and 20,000 units of Product B 50,000 units of Product A and 25,000 units of Product B 0 units of Product A and 50,000 units of Product B
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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