Direction: Identify each statement whether it is true or false. Cost of general advertising is non-manufacturing cost and a direct cost. Cost of fabric used in T-shirts of T-shirt manufacturing business is a variable cost, direct material cost and a period cost. Depreciation of Sewing Machine of T-shirt manufacturing business is a fixed cost and a factory overhead cost.
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.
Direction: Identify each statement whether it is true or false.
- Cost of general advertising is non-manufacturing cost and a direct cost.
- Cost of fabric used in T-shirts of T-shirt manufacturing business is a variable cost, direct material cost and a period cost.
Depreciation of Sewing Machine of T-shirt manufacturing business is a fixed cost and a factory overhead cost.
- Assembly line worker’s wages is a controllable cost, product cost, direct labor cost and indirect cost.
- Sales commission is a non-manufacturing cost and uncontrollable cost.
- Executive office and heat and air conditioning is an administrative cost, non-manufacturing cost and non-controllable cost.
- Cost of electricity used in sewing department of T-shirt manufacturing business is an indirect
cost, Factory overhead cost and a product cost.
- Depreciation of furniture of sales staff is a fixed cost, period cost and selling costs.
- Salary of the accountant is a non-manufacturing cost, fixed cost, period cost and administrative cost.
- Cost of refrigerator 13 months ago is a sunk cost.
- The difference in total cost incurred by hotel when additional guest is registered is a marginal cost.
- Depreciation of office equipment is a generally a relevant cost.
- The profit that would have been earned in a magazine and bookshop if the hotel had one is an opportunity cost.
- A cost can be both relevant and discretionary cost.
- Number of machine hours is a cost driver.
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