A company manufactures and markets three products that are made from the same set of machines. Production is limited by machine capacity. Using the data given below, you are required to indicate the priorities for products A, B, and C with a view to maximize profits. A в ( Cost per unit) Raw materials (Rs.) Direct Labour (Rs.) Other Variable Cost (Rs.) 2.25 3.25 4.25 0.50 0.50 0.50 0.30 0.45 0.71 Selling Price (Rs.) Standard machine Time 5.90 6.00 7.00 required (per unit) 39 minute 20 minutes 28minutes In the following year, the company faces extreme shortage of raw materials. It is noted that 3kg, 4kg, 5kg of raw materials are required to produce one unit of A. B. and c respectively. How would product priorities change".
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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