A Company produces items to order and had the following budgeted overheads for the year on normal activity levels. Department Assembly Machining Painting Packing Budgeted Overheads $ 36 000 86.000 40 000 30 000 Overhead Absorption Base 1 500 per labour hours 2 500 per machine hours 1 800 per labour hours 1 000 per labour hours Selling and administrative overheads are 10% of Factory Cost. The company received an order for 500 widgets, made as Batch 2024 and incurred the following costs:
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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