Assume a company is considering buying 10,000 units of a component part rather than making them. A supplier has agreed to sell the company 10.000 units for a price of $40.50 per unit. The company's accounting system reports the following costs of making the part 10,000 Units per Year 5 190,000 120,000 20,000 80,000 40,000 $450,000 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead, traceable Fixed manufacturing overhead, allocated Total cost Murple Choice OOOO One-hat of the traceable fixed manufacturing overhead relates to supervisory salaries and the remainder relates to depreciation of equipment with no savage value. If the company chooses to buy this component part from a suppler, then the supervisor who oversees its production would be discharged. Whet is the financial advantage (disadvantage) of buying 10.000 units from the supplier? $40,000) $70,000 $35,000) Per Unit $35,000 5. 19 12 2 8 4 $45
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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