Product A is produced with the following costs: 1) Paper material P20 per unit 2) Plastic P15 per unit 3) Rubber P27000 per 12000 units. 4) Labor P4 per unit 5) Indirect material costs P2.5 per unit The company pays P60,000 for rent per month for factory. It depreciates a P300,000 vehicle used for delivery and a P210,000-machine used for manufacturing, both have a life of 5 years. a. How much should be the total overhead costs if in a month, 1000 units were produced? b. How much should be the direct material costs if in a month, 1,500 units were produced? c. How much is the total conversion cost if 3,000 units are produced?
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.
Product A is produced with the following costs:
1) Paper material P20 per unit
2) Plastic P15 per unit
3) Rubber P27000 per 12000 units.
4) Labor P4 per unit
5) Indirect material costs P2.5 per unit
The company pays P60,000 for rent per month for factory. It
a. How much should be the total overhead costs if in a month, 1000 units were produced?
b. How much should be the direct material costs if in a month, 1,500 units were produced?
c. How much is the total conversion cost if 3,000 units are produced?
d.How much is the total product cost per unit if in a month of production 4,750 units were produced?
e. How many units should be sold in a month to break even?
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