Company XYZ Manufacturer Limited is involved in the production of antiseptic products. Recently Company has started manufacturing of Sanitizers due to overwhelming demand of this product in the market. As company has already expertise in production of disinfectants therefore this new product will increase the product line of business. You are required to describe whether this company is involved in Job order costing or Process costing method to calculate product cost also differentiate between these two types. Company’s CEO has directed the financial manger to calculate the total cost of production for sanitizers during the year 2020. For this purpose the accountants have recorded and prepared the following cost data related to production of five thousand sanitizers for year 2020 in company’s accounting record under the title of Job “A111” Indirect Material Rs. 38,000 Other Costs incurred: Rs. Indirect Labor 78,000 Purchases of Raw Material (Both Direct and Indirect) 200,000 Property Taxes, Factory 75,000 Direct Labor 60,000 Utilities, Factory 60,000 Raw Material, Beginning 21,000 Depreciation Factory 280,000 Raw Material, Ending 34,000 Insurance Factory 14,000 Beginning, Work in process Inventory 35,000 Total Actual MOV Cost incurred 545,000 Ending, Work in process Inventory 55,000 The company has a policy to use predetermined overhead rate to apply overhead cost to production. This rate for the year 2020 was calculated as Rs. 27 per labor hour. A total of 18000 labor hours were recorded for the year of 2020 for completion of “Job A111”. You are required to calculate the total amount of overhead cost applied for the “Job A111”. Also calculate the total manufacturing cost applied to this job for year 2020.
Company XYZ Manufacturer Limited is involved in the production of antiseptic products. Recently Company has started manufacturing of Sanitizers due to overwhelming demand of this product in the market. As company has already expertise in production of disinfectants therefore this new product will increase the product line of business. You are required to describe whether this company is involved in
Company’s CEO has directed the financial manger to calculate the total cost of production for sanitizers during the year 2020. For this purpose the accountants have recorded and prepared the following cost data related to production of five thousand sanitizers for year 2020 in company’s accounting record under the title of Job “A111”
|
Indirect Material |
Rs. 38,000 |
Other Costs incurred: |
Rs. |
|
Indirect Labor |
78,000 |
Purchases of Raw Material (Both Direct and Indirect) |
200,000 |
|
Property Taxes, Factory |
75,000 |
Direct Labor |
60,000 |
|
Utilities, Factory |
60,000 |
Raw Material, Beginning |
21,000 |
|
|
280,000 |
Raw Material, Ending |
34,000 |
|
Insurance Factory |
14,000 |
Beginning, Work in process Inventory |
35,000 |
|
Total Actual MOV Cost incurred |
545,000 |
Ending, Work in process Inventory |
55,000 |
The company has a policy to use predetermined overhead rate to apply overhead cost to production. This rate for the year 2020 was calculated as Rs. 27 per labor hour. A total of 18000 labor hours were recorded for the year of 2020 for completion of “Job A111”. You are required to calculate the total amount of overhead cost applied for the “Job A111”. Also calculate the total
This Company also wants to classify the cost in terms of its behavior so that it can differentiate between variable cost and fixed cost. You are required to highlight this difference and to describe which type of cost is included in fixed type and which is the part of variable cost from total manufacturing cost. Also classify cost with respect to Prime Cost and Conversion Cost, Product Cost and Period Cost using the above given information.
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