The Sanka Company manufactures a variety of expensive furniture. Its job costing system was designed using an activity based approach. There are two direct cost categories (direct materials and direct labor) and three indirect cost pools. These three cost pools represent three activity areas at the plant. Activity Area Materials handling P200,000 Cutting Assembly Budgeted OH Cost driver Pool rate Parts P2.5 P25.00 P2,160,000 P2,000,000 Parts DLH P250.00 Two styles of cabinets were produced in May, De Luxe and Standard. Their quantities, direct material costs and other data for May 2010 are as follows: Production 5,000 100 # of parts 100,000 3,500 DM cost DL Hours Standard De Luxe P3,500,000 P400,000 7,500 1,500 The direct labor rate is P50 per hour. Assume no beginning inventory and ending inventory is 20% of total production. coumu Required: Determine the total manufacturing cost for each product using ABC.
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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