he costs incurred by Treats Bakery Ltd. as part of its operations are listed below. Cost Items Amount $ Insurance on factory equipment 4,700 Wheat Flour and other key baking materials 55,800 Depreciation of computers used in the sales department 1,500 Bakers’ wages 38,600 Utility cost of the sales department 1,300 Rental for factory space 7,800 Depreciation on ovens and other factory equipment 4,800 Rental of space for the sales department 5,600 Salary of factory supervisor 17,000 Factory utility cost 6,900 You are required to calculate the: a) Prime cost: b) Conversion cost: c) Period 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.
The costs incurred by Treats Bakery Ltd. as part of its operations are listed below.
|
Cost Items |
Amount $ |
|
Insurance on factory equipment |
4,700 |
|
Wheat Flour and other key baking materials |
55,800 |
|
|
1,500 |
|
Bakers’ wages |
38,600 |
|
Utility cost of the sales department |
1,300 |
|
Rental for factory space |
7,800 |
|
Depreciation on ovens and other factory equipment |
4,800 |
|
Rental of space for the sales department |
5,600 |
|
Salary of factory supervisor |
17,000 |
|
|
6,900 |
You are required to calculate the:
a) Prime cost:
b) Conversion cost:
c) Period cost:
d) Product cost:
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