Calculate the Total Cost of Production. If the actual GBE amounted to 52.000€, calculate the amount of the difference between actual and assigned GBE. Answer whether there is an under-counting or an over-allocation of GBE.
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.
The company DEZ S.A. produces product D. For the attribution of the GBE, it uses as a cost guide the hours of direct work (OAE). For the fiscal year 2021, the estimated GBE amounts to 50,000 €, while it foresees to use 5,000 OEMs.
During the fiscal year 2021, the total Direct Materials used by the company amounted to 130.000€, while the cost of Direct Labour amounted to 53.900€.
- Calculate the Total Cost of Production.
- If the actual GBE amounted to 52.000€, calculate the amount of the difference between actual and assigned GBE. Answer whether there is an under-counting or an over-allocation of GBE.
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