Product Costs Period Costs Direct Materials Cost Direct Labor Cost Factory Overhead Cost Selling Еxpense Administrative Cost Expense
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.
Classifying costs
The following is a list of costs incurred by several businesses:
a. Salary of quality control supervisor
b. Packing supplies for products sold. These supplies are a very
small portion of the total cost of the product.
c. Factory operating supplies
d.
e. Hourly wages of warehouse laborers
f. Wages of company controller's secretary
g. Maintenance and repair
h. Paper used by commercial printer
i. Entertainment expenses for sales representatives
j. Protective glasses for factory machine operators
k. Sales commissions
l. Cost of hogs for meat processor
m. Cost of telephone operators for a toll-free hotline to help
customers operate products
n. Hard drives for a microcomputer manufacturer
o. Lumber used by furniture manufacturer
p. Wages of a machine operator on the production line
q. First-aid supplies for factory workers
r. Tires for an automobile manufacturer
s. Paper used by Computer Department in processing various
managerial reports
t. Seed for grain farmer
u. Health insurance premiums paid for factory workers
v. Costs of information technology support for the corporate
headquarters
w. Costs for television advertisement
x. Executive bonus for vice president of marketing
Instructions
Classify each of the preceding costs as a product cost or period cost.
Indicate whether each product cost is a direct materials cost, a direct
labor cost, or a factory overhead cost. Indicate whether each period cost
is a selling expense or an administrative expense. Use the following
tabular headings for preparing your answer. Place an "X " in tile
appropriate column.
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