The Canadian Company in Dubai uses a job-costing system at its production plant. The plant has a machining department and an assembly department. The company uses normal costing with two direct-cost categories: Direct materials Direct manufacturing labor
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 Canadian Company in Dubai uses a
The company uses normal costing with two direct-cost categories:
- Direct materials
- Direct manufacturing labor
Furthermore, the company uses two
- Machining department with machine- hours as the allocation base
- Assembly department with direct manufacturing labor costs as the allocation base.
The budget for the plant in 2020 is as follows:
|
Production plant |
Machine department |
Assembly department |
|
Manufacturing overhead costs
|
13 597 500
|
12 271 500
|
|
Direct manufacturing labor costs
|
1 455 000
|
6 075 000
|
|
Direct manufacturing labor-hours
|
54 000
|
22 500
|
|
Machine-hours |
277 500 |
55 500 |
- What is the budgeted manufacturing overhead rate in the machining and the assembly department?
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