A certain machining job for a machine shop in Davao can be done on six existing lathes, on which the initial cost has been amortized, if P 120 is spent on each lathe for special tool equipment. It is estimated that 25 min. time will be required per piece machined with labor at P 1.20 per hour. The job could also be done on automatic machines which will have to be purchased for P 3,640 each, including tools. Time per piece on these machines will be 4 minutes and labor will be charged at the rate of P 1.20 per hour total labor charge for whatever number of machines are purchased up to 5 because one man can tend a number of machines. What size of order for such pieces would justify purchasing automatic machines, assuming the cost of the special tools or the automatic machines to be written off the job? 4500 6000 7600 6300 4000 5500
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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