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METHODS OF COSTING
Different costing
methods are used to suit the
requirement of business;
Process Costing
Costing Methods/
Systems
Process
Job-order
Costing
Costing
Costing Systems
Job-order
Process
Costing
Costing
of
product
is
assigned
the
same
Job Costing
Wide
variety
products.
3
4
of
Process Costing
distinct Homogeneous
level) products.
(at
process-
Batch costing is applied to the firms wherein customized order are supplied in
bulk (large number of same units as per order). For example, pharmaceuticals,
printing jobs, Laptops supplied by Dell / Lenovo to institutions or
corporates (Bulk orders), e.g., Dell Latitude series, ThinkPad T series etc.
I-Banks & Project Advisory Firms (Avendus Capital, SBI Caps, etc.)
Management Consulting Firms (Bain & Co., McKinsey & Co., BCG, etc.)
Building construction (L&T Construction)
Hospitals
Law firms
Event Management Companies
Special-order printing
Production of movie (RK Studio, Pixar, 20th Century Fox, Paramount
SECTOR-WISE EXAMPLES
II.
process costing
process costing
III.
job costing
IV.
job costing
V.
job costing
VI.
A manufacturer of chemicals
process costing
VIII.
IX.
Flow Of Cost
Indirect
Material
Direct
Allocate
Indirect
Factory
Overheads
Labor
Direct
Work in
Process
Finished
Goods
Cost of
Goods
Sold
Employee
Time Ticket
Other
Actual OH
Charges
Materials
Requisition
Indirect
Labor
Manufacturing
Overhead
Account
Indirect
Material
Applied
Overhead
With
POHR
Job Cost
Sheets
8/03
Totals
8966
Date Completed
Overhead Costs Applied
Date
Rate
Amount
63,280
SOLUTION
(A) Overhead Rate:
= Total Overheads/ Direct Labour Cost
(for the month )
Total Overheads (for January) : = 15000 (indirect labour**) + 50000
(Depreciation) + 10000 (Supplies) + 60000 (Utilities) + 12000 (Misc.
Exp) = `147000
Direct Wages (for January) = 25000+30000+20000+10000+20000 = Rs.
105000
**Indirect wages= Wages accrued for the month Direct wages accrued
for the month
=120000-105000
Overheads absorption rate= 147000/105000 = ` 1.40 per rupee of direct
labour.
SOLUTION
(D) Calculation of Profit
Job 100
WIP cost
67200
Additional Direct Labour
10000
Additional Overheads (140% of DL) 14000
Total Cost
91,200
Profit (Balancing figure)
18,800
Price
1,10,000
Job 101
71650
20000
28000
1,19,650
50,350
1,70,000
SOLUTION: E
STATEMENT OF COST OF GOODS MANUFACTURED