The Shepard Company is to submit a bid on the production of 10,000 ceramic salad bowls. It is estimated that the cost of materials will be $7,500 and direct labor, $ 10,100. Factory overhead is applied at $5 per direct labor hour in the Molding Department and at 120% of the direct labor cost in the finishing Department. It is estimated that 800 direct labor hours will be required in Molding and the direct labor cost in Finishing will be $ 4,300. The company wishes a bid price consisting of a markup of 40% of its total production costs. Find • Estimated cost to produce • Estimated prime cost • Estimated conversion cost
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 Shepard Company is to submit a bid on the production of 10,000 ceramic salad bowls. It is estimated that the cost of materials will be $7,500 and direct labor, $ 10,100. Factory overhead is applied at $5 per direct labor hour in the Molding Department and at 120% of the direct labor cost in the finishing Department. It is estimated that 800 direct labor hours will be required in Molding and the direct labor cost in Finishing will be $ 4,300. The company wishes a bid price consisting of a markup of 40% of its total production costs. Find
• Estimated cost to produce
• Estimated prime cost
• Estimated conversion cost
• Bid price?
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