Question 4 Pendrill makes car bumpers. The following information is obtained from January's budge and is based on a production volume of 6,000 car bumpers $ Opening stock of car bumpers Fixed manufacturing overhead Variable manufacturing overhead Selling and administrative expenses (all fixed) Direct labour 72,000 18,000 25,000 120,000 Direct material used Selling price (unit) 90,000 64 The actual production and sales volumes for the first 3 months of the year were as follows: Number of car January bumpers: Production level 6,000 February March Quarter 7,000 7,000 18,000 17,000 5,000 Sales 4,000 6,000 Actual variable costs per unit and total fixed overheads incurred were exactly as forecast Required: Calculate the profit for each month and for the quarter (i) Using absorption costing (ii) Using marginal 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.
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