Gratitude Company provided the following information in relation to the construction of a building during the year: Total Finished goods Building Direct labor 6,000,000 4,200,000 1,800,000 Materials 7,000,000 3,000,000 4,000,000 Overhead 2,000,000 ? ? The following assumptions are made: 1. No overhead is to be assigned to the building. 2. Normal production of finished goods is 180,000 unita. Because of the construction of the building, finished gooda production totaled only 135,000 units. The building is to te charged with the overhead which would have been charged to the 45,0
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.
Gratitude Company provided the following information in relation to the construction of a building during the year:
Total Finished goods Building
Direct labor 6,000,000 4,200,000 1,800,000
Materials 7,000,000 3,000,000 4,000,000
Overhead 2,000,000 ? ?
The following assumptions are made:
1. No overhead is to be assigned to the building.
2. Normal production of finished goods is 180,000 unita. Because of the construction of the building, finished gooda production totaled only 135,000 units. The building is to te charged with the overhead which would have been charged to the 45,000 units which were not produced.
3. Overhead is to be apportioned in the ratio of direct labor. Required: Compute the cost of finished goods and building
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