ABC Company has two departments and uses a job-order costing system. ABC applies overhead in Department 1 based on machine hours and on direct labor cost in Department 2. The following information is available for April: Department 1 Department 2 Machine hours 2,500 1,000 Direct labor cost P667,500 P345,000 Applied overhead P825,000 P776,250 Raw materials used during April amounted to P975,000. 15% of the materials used was considered indirect. How much is the total manufacturing cost for April?
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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ABC Company has two departments and uses a
|
|
Department 1 |
Department 2 |
|
Machine hours |
2,500 |
1,000 |
|
Direct labor cost |
P667,500 |
P345,000 |
|
Applied overhead |
P825,000 |
P776,250 |
Raw materials used during April amounted to P975,000. 15% of the materials used was considered indirect.
How much is the total
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