The data given below relate to Frempomaa Ltd. for the year ended 31/12/2000: Fixed factory overhead cost was GHC160,000 Production units 1,000 units Sales 800 units at GHC500 Administration cost was GHC40,000 Variable selling and distribution overheads GHC80 Direct labour GHC70 per unit Direct material GHC50 per unit Prepare the profit and loss account using each of the following cost techniques: (a) Marginal Costing (b) Absorption Costing
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 data given below relate to Frempomaa Ltd. for the year ended 31/12/2000:
Fixed
Production units 1,000 units
Sales 800 units at GHC500
Administration cost was GHC40,000
Variable selling and distribution
Direct labour GHC70 per unit
Direct material GHC50 per unit
Prepare the
(a) Marginal Costing
(b) Absorption Costing
Step by step
Solved in 2 steps
