The Cost Sheet of a product is given as under: OMR Direct Materials 6.00 Direct Wages Factory Overheads: Fixed 3.00 0.50 Variable Administrative Expenses: 0.50 0.75 Selling and Distribution Overheads: Fixed 0.25 Variable 0.50 Total 11.50 The selling price per unit is OMR 13. The above figures are for an output of 85,000 units, the capacity of the firm is 100,000 units. A foreign customer is desirous of buying 15,000 units at a price of OMR 10.50 per unit. (A) Advise the manufacturer, whether the order should be accepted. (B) What will be your advice, if the orders were from a local merchant, at the same price? (C) What would be the profits, if the local selling price falls to OMR 11 from OMR 13, after acceptance of the order from a local merchant?
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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