A pro-forma cost sheet of a company provides the following particulars: Elements of Cost Amt. Per Unit (Php) Raw Materials 140 Direct Labor 60 Overheads 70 Total Cost 270 Profit 30 Selling Price. 300 Further particulars available are: Raw materials are in stock on an average for one month. Materials are in process on an average for half a month. Finished goods are in stock on an average for one month. Credit allowed by suppliers is one month – credit allowed to customers is two months. Lag in payment of wages is 1 1/2 weeks. Lag in payment of overhead expenses is one month. One fourth of the output is sold against cash. Cash in hand and at bank is expected to be Php. 50,000. You are required to prepare a statement showing the working capital needed to finance, a level of activity of 2,40,000 units of production. You may assume that production is carried on evenly throughout the year; wages and overhead accrue similarly and a time period of 4 weeks is equivalent to a month. Note: Year = 4 x 12 = 48 weeks FM-P203
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.
A pro-forma cost sheet of a company provides the following particulars:
Elements of Cost Amt. Per Unit (Php)
Raw Materials 140
Direct Labor 60
Overheads 70
Total Cost 270
Profit 30
Selling Price. 300
Further particulars available are:
Raw materials are in stock on an average for one month. Materials are in process on an average for half a month. Finished goods are in stock on an average for one month.
Credit allowed by suppliers is one month – credit allowed to customers is two months. Lag in payment of wages is 1 1/2 weeks. Lag in payment of overhead expenses is one month. One fourth of the output is sold against cash. Cash in hand and at bank is expected to be Php. 50,000.
You are required to prepare a statement showing the working capital needed to finance, a level of activity of 2,40,000 units of production. You may assume that production is carried on evenly throughout the year; wages and overhead accrue similarly and a time period of 4 weeks is equivalent to a month.
Note: Year = 4 x 12 = 48 weeks
FM-P203
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