J&J Limited Needlecraft makes hand embroidered sweat shirts to customer specifications. The following detail is available from the company’s budget. Cost centre Budgeted overheads Budgeted activity Cutting and sewing $ 93,000 7,200 machine hours Embroidering and packing $ 64,000 16,000 direct labour hours Administration, selling and distribution overhead is absorbed into batch costs at a rate of 8 per cent of total production cost. Selling prices are set to achieve a rate of return of 15 per cent of the selling price. An order for 45 shirts, Batch No. 92, has been produced for Shaldene Community Choir. Details of activity on this batch are as follows: Direct materials $ 113.90 Direct labour: Cutting and sewing 0.5 labour hours at $ 9 per hour $ 4.50 Embroidering and packing 29 labour hours at $ 11 per hour $319.00 Machine hours worked in cutting and sewing 2 Fee paid to designer of logo for sweat shirts $ 140.00 expense Required Calculate the selling price per shirt in Batch No. 92.
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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