QS 24-19C Joint cost allocation LO C3 A company purchases a 11,440-square-foot commercial building for $435,000 and spends an additional $56,000 to divide the space into two separate rental units and prepare it for rent. Unit A, which has the desirable location on the corner and contains 2,340 square feet, will be rented for $1.50 per square foot. Unit B contains 9,100 square feet and will be rented for $0.90 per square foot. How much of the joint cost should be assigned to Unit B using the value basis of allocation? X Answer is complete but not entirely correct. Market Value Percent of Market Value Joint Cost Apportioned Cost % of Mkt Value Numerator Denominator Unit $ 2,340 $ 3,150 $ 11,340 X 40.00% X x $ 491,000 $ 196,400 Unit B 9,100 X 11,340 X 60.00% X x $ 491,000 8,190 294,600 Totals $ 11,440 100.00% 491,000
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.
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